Workers' compensation premiums could rise by an average 12 percent next year under a proposal Monday from the state Department of Labor and Industries. The agency said the average premium would increase 6.5 cents per hour worked.

Workers’ compensation premiums could go up by an average 12 percent next year under a proposal Monday from the state Department of Labor and Industries. Average premiums would increase 6.5 cents per hour worked, the agency said.

The new rates take effect Jan. 1 under an emergency rule that is effective for 120 days, L&I said. On Jan. 4, the agency plans to hold public hearings in Spokane and Tacoma before adopting final rates.

Individual employers could see their rate go up or down, depending on their claims history and claim trends in their industry.

L&I postponed announcing its 2011 proposed rate increase because of Initiative 1082, which would have opened the state workers’ compensation system to private insurers and shifted some costs from employees to employers.

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Voters rejected I-1082 in last week’s elections.

L&I raised average rates 3.2 percent in 2008, 3.1 percent in 2009 and 7.6 percent this year. Next year’s proposed rate increase was expected to be in the double digits. Among the reasons: steep declines in premiums collected and investment income, as well as higher medical costs and injured workers staying on benefits longer due to the lack of available jobs.

L&I said the break-even rate increase recommended by its actuaries is 17.8 percent.

“We’re able to hold down the rate increase to 12 percent largely because L&I has aggressively cut costs, including our own budget, by over $200 million,” L&I Director Judy Schurke said in a statement.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com