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Why Did Classification Codes Change On My Workers Comp Policy?

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Why Did Our Classification Codes Change So Abruptly?

Why did the classification codes change on my Work Comp policy? I received this Class Code question last week. With NCCI changing so many classification codes, I thought this would be a good area to cover this week.

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Since 2006 the NCCI and State Rating Bureaus have changed many classification codes by either combining codes or creating new ones. If your class codes change due at renewal or at the yearly premium audit, this may not be a negative occurrence for your company.

The new class codes may actually reduce your premiums. It is not necessarily a negative change. One of the most common mistakes I see is when the employer decides that there is a better classification code that fits their business even though the code they wish to have is actually more expensive. This can happen even if the codes look less expensive.

How can this happen? There are other variables that are associated with each class code that may have the wrong effect on your Workers Comp premiums. You have to be very careful before disputing a class code change or if you think your current codes are incorrect.

Graphic Classification Codes Change Programmer
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Another classification code may look tempting as it is much less expensive. However, a class code that is associated with less risk can actually dramatically increase your E-mod (X-Mod). The workers comp savings that are due to a classification code switch may be wiped out and possibly even cause your company to pay more premiums. Some of the calculations and considerations can be very complicated.

If you feel your classification code does not necessarily fit your business and there is a better one that describes your business, it may be good to consult an expert on workers compensation premiums.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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