Workers Compensation Class Codes

NCCI Class Codes from NCCI Scopes Manual

NCCI Class Codes

One of the primary components of pricing workers' compensation insurance is classifying a risk or workplace exposure within the proper NCCI work comp class code. Incorrect risk classification by insurance agents and/or underwriters often results in premium that is higher than it should be, or conversely, lower premium that is reclassified at the time of audit creating a large audit balance due.

In most states, the classification system used is one devised and maintained by NCCI, the National Council on Compensation Insurance. NCCI is an independent advisory organization largely funded by the insurance companies who utilize their statistical analysis data. NCCI's function is to develop and provide the statistical data used to set manual rates (by state) for workers compensation quotes and to assign each employers' annual experience mod based on a ratio of claims frequency and cost to premium paid.

Non NCCI Jurisdiction States

There are a few states that do not use the NCCI classification system. California, New Jersey, New York, Delaware, and Pennsylvania are states that have their own classification systems. Texas licenses much of the NCCI system, but makes significant variations in specific classification rules. Many other states have some "state special" classifications that can vary significantly from NCCI definitions for certain workplace exposures or classifications. To see which states are NCCI jurisdictions and which have independent rating bureaus, consult our state workers compensation directory.

NCCI Scopes Manual

A scopes classification is comprised of a group of employers with similar exposure, or a type of hazard. A basic classification denotes a particular type of job duty or business. A class code is the systematic arranging of properties, persons, or business operations into groups or categories according to certain criteria. This arrangement is done to create a basis for establishing statistical experience and determining workers comp rates, and to avoid unfair discrimination. The essential concept of fair discrimination is that each risk should bear its fair share of the overall cost of expenses and losses in relationship to its own relevant expenses and hazards.
 
A Scopes class code is the identifying number for an occupational classification. It is a three-digit or four-digit numeric code assigned to a specific occupation of workers. The code is based on the nature of the work for the employer.  It is common for most employers to have teo or more class codes on their policy.
 
For example: Class code 8810 is for a clerical exposure and class code 5645 is for a general residential construction exposure.  A contractor might have laborers working under class code 5645 and an office person rated under the clerical code.
 
Classification Codes and Statistical Codes for Workers Compensation and Employers Liability Insurance (Scopes Manual)

The Scopes Manual is the workers compensation class code book containing four-digit numerical classification codes and the classification phraseology for each code used in classifying workers' compensation risks, including state specials, etc.  The NCCI Scopes Manual is available for purchase from NCCI.

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