The Ins and Outs of the NCCI and Classification

Often when discussing lowering workers’ comp premiums employers are advised to be sure they have correct NCCI classifications for their employees.
Unfortunately, classification is more than just consulting a convenient list on line. This difficult process requires the assistance of a professional in some aspect of workers’ compensation. It is doubtful employers without an insurance background would know where to start getting their classifications reassigned.
National Council of Compensation (NCCI) is owned by a group of insurance companies and operated by the executives of these participating insurers. They function as a U.S. insurance rating and data collection bureau that specializes in workers compensation, annually compiling data from outcomes of millions of workers’ comp claims and policies
NCCI and participating insurance companies have a complicated relationship with the states they operate in. Much of the heavy-duty workers’ comp statutory regulation promulgated by states is derived from their relationship with NCCI.   In theory NCCI is a not for profit. However,  everything they produce is regarded as private, copyrighted material so any information you attempt to extract from them comes with a price tag.    
In 34 states classifications begin and end with the (NCCI). 
Four monopolistic states, ND, OH,WA and WY, does not govern.
Not considered NCCI states: (12)  CA, TX, MN, WI, IN, MI, PA, NY, MA, NJ, DE and NC.
Of these 12, they break out as follows:
States with rating bureaus:  (5)  CA, NJ, NY, DE and PA
TEXAS:  Is a hybrid — using NCCI but making some changes to it.
License NCCI/use smaller parts of it:  (6) MN, WI, IN, MI, MA, NC
No matter how we slice it, NCCI does not make it easy for employers to classify/reclassify.
Classifications by NCCI are based on overall industry type, not each specific job function therein. A few exceptions are clerical, outside sales, and often drivers. Construction is the only industry where classifications are assigned at the employee level, depending on actual work because the exposure is so much greater for workers who do roofing and high-rise construction.   
If you suspect your business or employees are/were misclassified, you have several ways to investigate.
1.     Contact your agent. Even though your agent probably did the misclassification of your business in the first place, the agent is also the first line of defense. Contact them and ask them to reassess.
2.     Contact a workers’ compensation consultant. Workers’ comp consultants are experts at navigating through the complicated infrastructure in which the NCCI, the states where you operate, and the multiplicity of insurers co-exist. 
3.     Contact the NCCI directly. They do charge a fee for their services but they are a good resource. NCCI produces several manuals each year, among them a manual called the “Scopes Manual” containing the classification codes for employment types. There is a fee to purchase the manual. (workersxzcompxzkit).
4.     Contact Your State Workers’ Compensation Bureau to request an onsite inspection and rating.
The process of NCCI classification is an art, not a science and there seems to be is a great deal more latitude in classifications than one might suspect.   Be an active advocate in your reclassification quest and follow up diligently.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: or 860-553-6604.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
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