The Washington State Department of Labor & Industries has proposed a 4.9% increase in the average hourly workers’ compensation insurance rate for 2027 as medical and wage-replacement costs continue to rise.
If adopted, the increase would add about $1.44 a week, or roughly $75 a year, to the average cost of coverage for each full-time employee. Employers pay about 75% of Washington workers’ compensation premiums, while employees contribute about 25%.
The 4.9% figure represents a statewide average rather than a uniform increase for every company. Individual employers will see different changes depending on their industry risk classification, recent claims history and the frequency and cost of claims within their sector.
Washington bases workers’ compensation premiums on hours worked rather than payroll. That structure means premiums don’t automatically rise when wages increase, unlike systems where insurance costs are calculated as a percentage of employee pay.
L&I therefore reviews rates annually using several financial measures, including wage inflation, projected benefit payments, medical expenses, operating costs and investment income.
The agency also considers the size of its workers’ compensation contingency reserve when setting proposed rates.
The department said the proposed 4.9% increase remains below the level required to cover projected 2027 claim costs in full. L&I plans to use money from the contingency reserve to make up the difference rather than pass the entire expected cost increase to employers and workers.
Workers’ compensation insurance in Washington pays medical expenses as well as wage and disability benefits when employees suffer occupational injuries or illnesses. Survivor benefits are also available to qualifying family members when a worker dies because of a job-related injury or disease.
The proposed increase follows another 4.9% rise adopted for 2026. That adjustment added an average of about $1.37 per week for each full-time employee, with L&I again using reserve funds to keep premiums below projected claim costs.
Washington’s statewide average wage also increased 4.9% in 2026, triggering an equivalent adjustment in time-loss and pension benefits for many injured workers beginning July 1. Higher benefits add to the cost pressures considered when L&I sets future insurance rates.
Over the longer term, workers’ compensation rate growth has generally remained below wage inflation. L&I data show average hourly premium rates rose 3.8% in 2025 and 4.9% in both 2026 and the proposed 2027 schedule, following several years when wage growth exceeded insurance rate changes.
Washington also differs from most states because employees pay a meaningful portion of workers’ compensation premiums themselves.
L&I estimates workers currently cover about 24% of premiums before retrospective refunds, or roughly 25% when those refunds to employers are considered.
The agency will review public comments before adopting final 2027 rates. Once approved, individual base rates will vary across hundreds of industry classifications according to their expected losses and claims experience rather than following the statewide 4.9% average exactly.
