Workers’ compensation rates in Washington will rise by 3.8% in 2025, as reported by the Washington State Department of Labor and Industries (L&I). The increase stems from factors such as wage growth, according to BestWire.
L&I noted that a 5.5% average increase would have been required to meet its break-even point but plans to use reserves to cover the shortfall. On average, this rate hike will add $52.50 per employee annually.
This modest change helps cover higher wage and medical benefit costs while maintaining stable and predictable rates
L&I Director Joel Sacks
Washington calculates workers’ compensation premiums based on hours worked or risk exposure, rather than a percentage of payroll. This method ties L&I’s costs to wage increases.
Workers’ compensation rates
Between 2012 and 2023, the state’s average wage consistently outpaced workers’ comp premium hikes, except in 2022 when wages rose 2%, compared to a 3.1% hourly rate increase.
Employees in Washington contribute 24% of their workers’ comp premiums, a unique feature compared to other states. L&I stated that this portion would remain largely unchanged in 2025.
Rate adjustments consider factors such as expected benefit costs, reserve levels, wage and benefit inflation, operational costs, and investment returns. The 3.8% change represents an average; specific rates will vary based on industry classification and claims history.
Top 5 workers’ compensation insurers in Washington by market share
| № | Insurer | Market Share |
| 1 | Hartford Insurance Group | 22.51% |
| 2 | CopperPoint Insurance Group | 18.72% |
| 3 | Zurich Insurance US PC Group | 14.39% |
| 4 | Liberty Mutual Insurance Cos. | 9.3% |
| 5 | Red Shield Insurance Group | 6.01% |
For instance, beer, wine, and soft drink distributors face a 16% average premium increase, while shake and shingle mills will see a 33% average decrease.
This increase contrasts with trends in other states, where workers’ comp premiums are generally declining. Colorado, for example, expects a 4.3% rate drop in 2025.
According to a recent AM Best report, in the last five years, the annual underwriting profit in the US workers’ compensation line of business has averaged $4.8 bn and totaled almost $24 bn during the period.
Uncertain future for US workers’ compensation insurance line, despite the line generating solid profits. This is a level of profitability unmatched by any of the other major property/casualty lines of business.
Direct premium volume also rebounded in 2023 to $52.2 bn, following a sharp drop in 2022. Which, according to the agency, reflects the benefits of workplace safety and legislative changes that have reined in workers’ compensation claims costs as the frequency of claims continues to decline.
Strong favourable loss reserve development for workers’ compensation drove the positive calendar-year results and was the primary reason for the entire property/casualty industry’s favourable reserve development. What appears to be redundant reserves sets the stage for more favourable development in 2023.
