Wolpert Insurance & Risk Management understands how difficult and confusing Massachusetts workers compensation can be. However, for small business owners looking for answers to their questions they’ve come to the right place. Specifically, some business owners like you may be wondering what workers compensation “class codes” are all about and what purpose they serve. If you’d like to learn more, here’s some information for you.
What is a worker’s compensation classification code?
The way a class code works is this: Numbers are assigned to certain types of jobs. For instance, construction tool manufacturing has a class code of 3126 and electric light and power line construction has a code of 7538.
A class code is a three or four digit code assigned by National Council on Compensation Insurance (NCCI). Class codes help differentiate between the various job duties or “scope of work performed” by employees. The classification system contains over 700 unique codes and is the basis for pricing and underwriting a worker’s compensation insurance policy.
One of the primary components of pricing worker’s compensation insurance is classifying a risk or workplace exposure within the proper class code. Incorrect risk classification by insurance agents or business owners can result in a premium that higher than it should be. These codes are maintained by the NCCI, whose function is to develop and provide the statistical data used to set rates for workers compensation pricing and to assign employers’ annual experience modification rate.
How is the classification system determined?
According to The Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB), the idea of the classification system is to group employers into separate classes to determine that the rate for each classification reflects the exposure common to those employers. For instance, an employer who deals with administrative work in an office would have lower classification rates than an employer who dealt with vehicle maintenance.
Each classification includes all the various types of labor found in a business. So for example the risks involved in working in an office may include: carpel tunnel related injuries, trips and falls, injuries while changing a light bulb or slipping in the kitchen. For an employer involved with vehicle repair, there are many risks involved with bodily injury, especially in relation to the head.
Massachusetts is ranked 44th in the nation for worker’s compensation premium rates as of 2010. This means that Massachusetts is one of the most affordable states in the U.S. for worker’s compensation. Unlike most states, MA is not under jurisdiction of the NCCI. Massachusetts maintains its own rating bureau and instead is under the WCRIB.
At Wolpert Insurance & Risk Management we want to help small business get the information they need on worker’s compensation in Massachusetts. For more info on your coverage or on worker’s comp class codes, contact us today and we’ll happily answer your questions.