OLYMPIA - Premiums for workers' compensation insurance will increase next year for the first time in three years. Although disappointed, Sen. Janéa Holmquist Newbry is not surprised.

Last week, the state Department of Labor and Industries announced an average 2.7 percent rate increase for 2014 premiums, which is an increase of less than 2 cents per hour worked.

"Without industrial-insurance reforms to capture cost savings, this is what employers and workers can expect for much of the next decade," Holmquist Newbry said, R-Moses Lake. "Unless we capture some major cost savings, the state is on track to raise workers' comp taxes by $2 billion in the next nine years. Washington has the nation's highest industrial-insurance taxes. We need to get these costs under control if we are at all serious about showing employers that Washington is a good state for them to do business."

The rate increase is expected to bring in about $55 million in additional premiums next year, according to Labor and Industries. Washington is the only state where workers contribute a substantial portion of the premiums. Next year, their share will be about 25 percent.

According to CNBC's Best States for Business Survey 2013, Washington ranks sixth-worst when it comes to the cost of doing business. Holmquist Newbry said the state's high workers' compensation taxes are a major factor in the poor rankings.

"Washington's workers' compensation system is a bad deal for both employers and employees," she said. "It takes longer than twice the national average to return an injured worker to work in Washington. Rather than focusing on getting well so they can go back to their job, too many injured workers get trapped in an unresponsive system. In the worst cases, many workers are left with no option but a lifetime disability pension, which prohibits them from ever returning to work, even if they would choose to do so."

Holmquist Newbry added injured workers in the state deserve more options to pursue gainful employment recovery if they are willing and able.

"Unfortunately, our industrial-insurance system restricts the options of voluntary structured settlements to claimants age 55 and older," she said. "In contrast, 44 other states do not arbitrarily prevent younger workers from choosing these settlements. As a result, Washington's employers are cutting bigger checks to L&I instead of investing in expanding their operations and hiring more workers."

Holmquist Newbry hopes the Legislature will make workers' compensation reform a top priority when it meets in January for session.

"The status quo is no longer acceptable," she said. "If we want to attract new employers and jobs in addition to holding on to the ones we already have, Washington must become more competitive. If we won't reform programs like workers' compensation, other states will happily woo away the jobs and prosperity that should be ours."

The state's workers compensation system, the seventh-largest industrial insurance system in the country, provides coverage to about 2.5 million workers and more than 160,000 employers.