Civil Engineer Was On The Right Track With Workers Compensation Codes
A civil engineer was looking over the house that I am presently selling. He had asked me what I do for a living. I had told him that I am a worker’s compensation consultant.
He posed this question –
I work as a civil engineer. My company is moving all the civil engineers from a remote location into the main plant. Today we were told that they are setting up an offsite trailer for us with a barrier fence between the plant and us.
Why would they put us so far away from the plant and build a fence between the trailer and the plant? Is it some risk factor?
I said – “Well your plant manager did not do that because he does not like the civil engineers. It could be due to the Workers Compensation rating system. ”
I went on to explain that the civil engineers working inside the actual plant would likely cost the company a large amount of workers compensation premiums as the civil engineers could be grouped into a plant worker’s classification code.
The plant manufacturers large metal pipes so the difference would be huge in the Workers Compensation rate. I pulled out my trusty smartphone and pulled up the North Carolina Rate Bureau advisory lost costs.
- Class Code – 8742 (Civil Engineer that does not handle material manufactured) – .26 per $100 – very low rate
- Class Code- 3022 – (Pipe Mfg) – 4.81 per $100 – much higher rate
Comparing those two classification codes = 4.81 / .26 = 18.5 or 1850% more expensive if the group was included in the pipe manufacturing Class Code. Ouch!
He said so you are telling me that there is an 1850% difference if we work directly inside the manufacturing plant even though we are not involved in the manufacturing process? I said yes.
One has to remember that these are advisory rates and not the insurance carriers rates due to the Loss Cost Multipliers filed by all workers compensation insurance carriers.
The average civil engineer salary is $83,750. Let us take that a step further.
83, 750 * (.26/100) = $217.75 in yearly premiums for Civil Engineer
83,750 * (4.81/100) = $4,028.38 in yearly premiums working in the plant
And yes, I have made a ton of assumptions, but the idea is the same. The plant manager and likely the CFO were smart not to bring the civil engineers into the plant. I am sure there were many other considerations. Workers Comp rates would have likely been one of the considerations.
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4 Responses
It’s a good thing predictive pricing models are replacing such nonsense.
I’m not sure I understand your analysis. Class 8601 is for an insured engaged in engineering as a distinct business, not for engineers on the staff of a manufacturer. Engineers on the staff of a manufacturer are assigned to the basic classification of the business. Physical separation does not allow a separate class code for an engineer, unless they have no exposure to the operative hazards of the business, in which case they may qualify for 8810, but not 8601.
Where am I going wrong in my thought process?
You are correct. Thanks for pointing that out. I had re-written a part of the article to match what you are saying after I received a phone call similar to your comment. The post did not update in the system.
Frank, thanks for the comment as your previous comments. When the predictive pricing models become more accurate than the Class Code system, I will become a fan. I agree with you totally that there is too much linkage between alternate codes – the old classification by analogy
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