Most Reclassified Class Code – Which One Topped NCCI List For 2019?

July 23, 2020 By JL Risk Management Consultants

Reclassified Class Code During 2019 Inspections – Which Code Changed The Most?

NCCI recently released a quick report on the most reclassified class code for 2019. We have seen this class code very often in the last five years. Which was one was it?

picture of convenience store reclassified class code NCCI

Wikimedia Commons – Mbrickn

The most reclassified class code for 2018 can be found in an article I wrote earlier. That Classification Code was 9015 – Building or Property Management—All Other Employees.

We received many questions on that reclassification. Some companies, consultants, and other workers comp experts were a little confused. We answered them by going over the article. Check that one out. The link is in the above paragraph.

The most reclassified class code for 2018 – 2019 was 8006 – the 7-11 QuikTrip code but not for all 7-11’s or QuikTrip’s. The exact NCCI Class Code moniker is 8006 – Gasoline Station – Self-Service and Convenience/Grocery Retail.

Let’s not cover the whole class code. I sometimes will provide the whole Class Code page – instead, we will concentrate on which codes were assigned in place of 8006.

NCCI Governing Class Code Definition

One of the most popular questions that we have received in our 24+ years of business is

“Why is our business rated under one classification code.” The answer from the article is:

The governing code, as defined in NCCI’s Basic Manual for Workers Compensation and Employers Liability Insurance (Basic Manual) Rule 1-B-5, is the basic classification at a specific job or location (other than a standard exception code) that produces the greatest amount of payroll. If a change to a policyholder’s governing class code occurs (as documented on an NCCI Inspection & Classification Report), then the governing code is considered reclassified.

The other one is – wait, we have had Class Code 8810 Clerical/Administrative reclassified the most in our business. The article was referring to the Governing Class Code.

Code 8006 – Which Class Code Was Substituted?

Employers reclassified class code substitute

Wikimedia Commons – https://pixabay.com/en/users

The answer would be these codes were substituted for 8006. NCCI was kind enough to share three different Class Codes. They are:

8033 Store – Meat and Grocery, and Provision Combined – Retail NOC – as a side note look very closely when your business is rated under a NOC (Not Otherwise Classified) operation – Check the 10 Red Flags Article for clarification
9083 – Restaurant – Fast Food
8017 – Store – Retail NOC

I will not cover the exact specifications within each reclassified class code. Please read the NCCI article.

A quick summary of why the codes were changed:

8033 – handling of fresh meats
9083 – sales receipts for the food and beverage service exceeded 50% of the overall sales.
8017 – did not sell a variety of items that are typically sold at a convenience or grocery store or kiosk operations that sold prepackaged snacks, sandwiches, and beverages.

The 8017 Class Code has created many lively debates over the past few years as this code is very interrelated with so many other reclassified class codes.

If any of this seemed confusing or if you disagree, please comment below. We would love to hear any questions on the Reclassified Class Code 8006 at any time.

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Classification By Analogy – When No Class Code Describes Your Business

August 6, 2012 By JL Risk Management Consultants

When No Code Fits – Classification By Analogy

The term Classification by Analogy generates many questions on how companies are rated by the rating bureaus such as NCCI and the WCIRB.

One of the most confusing terms associated with classification codes is the classification by analogy. This is especially true if the class codes were changed at the time of the premium audit. Last week, I covered how a company’s workers compensation classification codes may change as a company grows over time.

Graphic of Five Bulb Classification By Analogy With One Bulb Open

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Classification By Analogy is the interpretation of what Workers Comp Classification Codes are the closest to the job functions in a company. The insurance company looks at each classification code as a level of risk. These are “guesstimations” as there is no exact classification code that matches a job function or employee’s job description. The most important word is interpretation. No one knows your business as well as you do. However, the correct class codes for your business can be a tricky matter.

One of the red flags on Workers Comp audits is the use of Not Otherwise Classified (NOC) when classifying some of the job functions in your company by analogy. Over time, most rating bureaus have reduced the number of class codes. This has given rise to many of the old classifications that better described your business being combined into a more general class code or NOC.

One of the caveats with challenging or questioning a classification code that is analogous to your company’s job functions is the class code that you think more closely matches your company may end up costing more money that the original one. This is especially true if the Experience Mod is above a 1.4.

As always, if you feel you that there is something wrong (gut feeling), you may want to call in an expert.

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Scopes Manual – Where I Can Find It For Research?

August 26, 2010 By JL Risk Management Consultants

Scopes Manual Definition

The Scopes Manual is a guide to proper classification of employees published by NCCI. This manual details each employee classification code with a definition and a list of employees who fall under that specific code. The Scopes Manual includes NOC definitions as well as classification codes that are state specific.

Wikimedia Commons – Abhi Sharma

The manual used to be a very large involved book.

Workers Comp Class Codes – Quick Primer On Important Policy Term

August 30, 2007 By JL Risk Management Consultants

Workers Comp Class Codes Quick Primer

The Workers Comp Class Codes are also known as Class Codes, Work Comp Codes, Codes, etc. Today, let us start with the definition of the Class Codes.

Picture of Man workers comp Class Codes Self Audit

123RF

As I mentioned in my last post, the errors that we find have a common theme to them, which are Classification Codes. In laypersons terms, Classification Codes are how a Workers Comp carrier and the NCCI or your state rating bureau views your business operation. For instance, a trucking company may have a Classification Code of 7228 – which are short-haul truckers.

There is a very important point that needs to be made now. Your Classification Codes are not the same as your SIC codes. Your Work Comp Class Codes should not be based on your SIC codes. Quite often very small employers start out by doing a self-audit on their payroll and job types. When they grow, the Class Codes that are used year after year may have been based on the owner’s self-audit and description of the company.

Agent With Man And Woman Workers Comp Class Codes Discussion

StockUnlimited

This is not to say that the insured, NCCI, agent, or insurance carrier did anything wrong. Quite often, the Classification Codes are just copied from year to year by the agent. What if you change course in what your business is doing, or if the NCCI or your state rating bureau performs an in-person audit? I am not talking about the premium auditor that does a yearly payroll audit. Do your Classification Codes have quite a few NOC’s (Not Otherwise Classified)?

A great example is a firefighting company that we assisted that was classified as a water carrier. Why? They had Water in their name. As they were a small company, they were audited over the phone year after year. The firefighters now pay over 60% less in Workers’ Compensation premiums after we were able to convince the State Rating Bureau and their insurance carrier of the mistake. Who was to blame? This was just the natural Work Comp insurance process that went slightly awry.

The main area I wanted to cover here today, which should have been covered last Friday, is how to tell if your Classification Codes are wrong. This is a very tough one, but here are some observations that we had while reviewing Workers Comp policies:

You have NOC in your Classification Code
The Classification Code is not what you do in your business.
The NCCI or State Rating Bureau has never inspected your business
Sometimes the Class Codes can be wrong if you have just been inspected (Catch 22)
The NCCI, Insurance carrier or Insurance Company Payroll Auditor has abruptly changed your Classification Code
Along with the abrupt change, you receive a very large Workers Comp premium bill
You have two or more very distinct businesses that are being classified in one “umbrella” class code
Your competitors are being classified differently
The #1 way to know is that you or someone in your company has a gut feeling that your Class Code is wrong, or there is something that is wrong overall with your Workers Comp insurance policy – that is when we receive most of our calls and emails, and gut feelings are right about 80% – 90% of the time.

Picture Hand Pointing Web Workers Compensation Classification Codes Concept

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I will add to this list as time permits. Those are the ones that I can remember off the top of my head. I am on the road this week traveling to the West Virginia NCCI Conference.

West Virginia has come a long way from a monopolistic state for Workers Compensation to a fully open market. Brickstreet has been the interim monopolistic private carrier for the last two years and will be the carrier until July 1, 2008.

Brickstreet will be the carrier for some of the West Virginia state agencies until July 1, 2010.