An article in Wednesday's editions dealing with workers' compensation insurance in the District of Columbia incorrectly reported the basis for calculating premiums paid by employers. Premuims are based on each $100 of payroll costs.
For the first time in more than a decade, premium rates that employers pay to insure District of Columbia workers against on-the-job injuries have been reduced, saving business firms an estimated $7 million over the next 12 months.
The National Council on Compensation Insurance, a New York-based rating agency that represents the insurance industry, filed documents with the D.C. Insurance Department calling for an average 5.3 percent reduction in premiums in the 12-month period that began July 1. Although still subject to departmental review, the lowered rates went into effect that day.
In the documents, the rating agency credited a reduction in claim payments last year. Officials of the agency were not available to discuss details. One local business spokesman, who asked not to be named, theorized that businesses are paying more attention to safety programs and that there has been a reduction in the size of the city's hazard-prone blue collar work force.
Skyrocketing rates for both the workers' compensation insurance and unemployment compensation programs have been major irritants to businesses in the District, where such costs are higher than in neighboring Maryland and Virginia.
In response, and over objections from labor unions, the D.C. City Council last year enacted a law curtailing the workers' compensation program and freezing the top benefit at $396 a week, a reduction from $426. Enforcement of the new law has been suspended during a legal challenge still pending in the D.C. Court of Appeals.
Workers' compensation insurance pays benefits to employes injured while at work and to survivors of those killed on the job. The program, required by law, has ballooned from a cost of about $20 million paid in premiums by District employers in 1972 to nearly $138 million in 1980.
An average 5.3 percent reduction would save employers more than $7 million overall, but the actual amounts would vary depending upon the nature of an individual business and the risk of injury to its workers. For example, a service station operator must pay $6.58 for each $1,000 of payroll while a department store pays $1.67 and an attorney's office pays only 39 cents.
Metro, the regional transit authority and one of the city's largest employers covered by the program, pays about $1.2 million in premiums in the District and has been notified that its payment in the coming year will drop about $60,000 after years of increases that have brought repeated cries of anguish from Metro board members.
For District employers, the lowered workers' compensation premiums will not quite offset an overall increase of $11 million this year in taxes they must pay into the cityrun unemployment compensation fund.