Hawai'i employers may get a big cut in their workers' compensation insurance premiums starting on Jan. 1 because of strides in workplace safety and lower employee claims.

The state Insurance Division said National Council on Compensation Insurance had requested a 12.3 percent decrease in "loss costs," the biggest expense component used by insurers in setting premiums. The loss costs include claims expenses paid by insurers.

Hawai'i has some of the highest workers' compensation insurance premiums in the nation, ranking fourth most expensive in a 2004 study by Oregon's Department of Consumer and Business Services. Hawai'i Insurance Commissioner J.P. Schmidt said the state has worked on safety programs to help employers lower costs. The state Department of Labor and Industrial Relations, for example, will do inspections that point out safety infractions that need to be fixed, he said.

"The main reason we're seeing a decline is there's a trend of lower claims being filed," Schmidt said. "The employers have done a very good job of instituting safe workplace programs."

It is the fourth year that there's been a decline in loss costs. Last year there was an 18.2 percent decline.

Schmidt said more work needs to be done to lower costs, including how much is spent when attorneys are involved in seeking workers' compensation claims.

Other expenses used in computing premiums can include taxes, profits and administrative fees.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.