Workers’ compensation pure premium rate to drop for 12th-straight year

In 2025, Oregon employers, on average, will pay less for workers’ compensation coverage, the Oregon Department of Consumer and Business Services (DCBS) announced today. The decline in costs marks 12 years of average decreases in the pure premium rate – the base rate insurers use to determine how much employers must pay for medical costs and lost wages.

Underpinning the cost decreases is the success of Oregon’s workers’ compensation system, which includes programs to control costs, maintain good worker benefits, ensure employers carry insurance for their workers, resolve disputes, and improve workplace safety and health.

The numbers illustrate positive, long-term trends, including:

• Employers, on average, would pay 91 cents per $100 of payroll for workers’ compensation costs in 2025, down from 93 cents in 2024, under a proposal by DCBS. That figure is referred to as loaded pure premium and covers workers’ compensation claims costs, assessments, and insurer profit and expenses.
• The pure premium rate would drop by an average 3.2 percent under the proposal. In fact, the pure premium will have declined by 48 percent from 2016 to 2025.

The reduction in costs is due to an improvement in loss experience in Oregon, according to the National Council on Compensation Insurance (NCCI). NCCI is the U.S. rate-setting organization whose recommendation DCBS reviews as part of its annual public process to decide rates.

Employers’ total cost for workers’ compensation insurance includes the pure premium and insurer profit and expenses, plus the premium assessment. Employers also pay at least half of the Workers’ Benefit Fund assessment, which is a cents-per-hour-worked rate.

The decrease in the pure premium of 3.2 percent is an average, so an individual employer may see a larger or smaller decrease, no change, or even an increase, depending on the employer’s own industry, claims experience, and payroll. Also, the pure premium does not consider the varying expenses and profit of insurers or individual policyholders’ experience modification, if eligible.

The stability of Oregon’s workers’ compensation system helps sustain the trend in lower costs. The system includes the Workers’ Compensation Division; Oregon OSHA; the Workers’ Compensation Board, which resolves disputes over the state’s workers’ compensation and workplace safety laws; the Ombuds Office for Oregon Workers, an independent advocate for workers on workers’ compensation and workplace safety and health; and the Small Business Ombudsman, an independent advocate for small business owners on workers’ compensation.

The premium assessment funds those successful programs.

The premium assessment, which is a percentage of the workers’ compensation insurance premium employers pay, is added to the premium. It would remain at 9.8 percent in 2025, the same as 2024, under the DCBS proposal. In fact, 2025 would mark the fourth straight year the premium assessment remained at 9.8 percent.

“In light of rising costs everywhere, we are glad to provide employers and workers some relief through our proposed decisions today and the continued strength of our workers’ compensation system,” said Andrew Stolfi, DCBS director and insurance commissioner. “Working to prevent injuries, provide comprehensive benefits to injured workers, and keep costs low for employers is imperative for us to maintain a healthy and robust system.”

Meanwhile, the Workers’ Benefit Fund assessment funds return-to-work programs, provides increased benefits over time for workers who are permanently and totally disabled, and gives benefits to families of workers who die from workplace injuries or diseases.

The fund’s revenue comes from a cents-per-hour-worked assessment. The assessment would remain at 2.0 cents per hour worked in 2025. It is the lowest rate since the inception of the cents-per-hour assessment in 1996.

The decrease in the pure premium will be effective Jan. 1, 2025, but employers will see the changes when they renew their policies in 2025.

Oregon’s workers’ compensation premium rates have ranked low nationally for many years. Oregon had the 10th least expensive rates in 2022, according to a nationally recognized biennial study conducted by DCBS.

The public hearings for the workers’ compensation assessment and the Workers’ Benefit Fund assessment are Thursday, Sept. 19, at 3 p.m. and 4 p.m., respectively.

Written testimony will be accepted through 5 p.m. Thursday, Sept. 26, 2024, by the Director's Office of the Department of Consumer and Business Services, 350 Winter St. NE, P.O. Box 14480, Salem, OR 97309-0405.

The following cost chart summarizes the changes:

https://www.oregon.gov/DCBS/reports/cost/Documents/wc-summary.pdf

More information about Oregon workers’ compensation costs is at https://www.oregon.gov/DCBS/cost/Pages/index.aspx

The loaded pure premium includes insurer costs, known as expense loading factors. Historic figures are adjusted to reflect the 2024 mix of employment and payroll.

Workers’ Compensation Cost Summary: Effective Jan. 1, 2025
What	Pays for	Cost/Change	Recent Rate History
Pure premium	Medical costs and benefits for lost wages. Excludes insurer expenses and profit.	Average 3.2 percent decrease from 2024.	2024: 6.7 percent decrease 2023: 3.2 percent decrease 2022: 5.8 percent decrease 2021: 5.6 percent decrease 2020: 8.4 percent decrease
Premium assessment	State regulatory costs to administer workers’ compensation and workplace safety programs.	9.8 percent of premiums for insured employers.	This amount is unchanged from 2024, 2023, and 2022. The rate was increased by 0.4 percentage points in 2022 and 1.0 percentage points in 2021.
Self-insured employer and employer group premium assessment	Self-insured employers and self-insured employer groups pay the premium assessment, plus an additional amount to fund reserves that ensure prompt payment of claims in the event of insolvencies.	0.1 percent for self-insured employers. 0.1 percent for public-sector self-insured groups. 0.5 percent for private-sector self-insured employer groups.	These amounts are unchanged from 2024.
Workers’ Benefit Fund (Payroll assessment)	Special benefits for certain injured workers and their families, and return-to-work programs.	2.0 cents per hour worked. Employers and employees split the cost.	The rate was 2.0 cents per hour in 2024.

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About Oregon DCBS: The Department of Consumer and Business Services is Oregon’s largest consumer protection and business regulatory agency. The department administers state laws and rules to protect consumers and workers in the areas of workers’ compensation, occupational safety and health, financial services, insurance, and building codes. Visit dcbs.oregon.gov.

Contact information
Mark Peterson, communications director
971-283-5405
mark.peterson@dcbs.oregon.gov