The National Council on Compensation Insurance (NCCI) was founded in 1923 and located in Boca Raton, Florida. NCCI partners with more than 30 states to provide recommendations about what the insurance carriers within the state should charge for workers compensation insurance premium. The mission of NCCI is to foster a healthy workers compensation system in the states with whom they partner. They do so by gathering data, analyzing industry trends, and providing objective insurance rate and loss cost recommendations. One beneficial service NCCI provides for the states it partners with is to provide the Scopes Manual for individual Workers Comp Codes.
What is the NCCI Scopes Manual?
The NCCI Sopes Manual is designed as an aid to insurance carriers and agents to better understand and more effectively assign workers compensation insurance classifications to businesses in all industries. The Scopes Manual details every employee classification code by providing a definition and a list of employees who fall under each specific code. The manual also includes definitions as well as codes that are state specific.
Each code is given a four digit number that represents all operations that are included in each particular classification. What is especially beneficial to underwriters who work at insurance carriers is that the NCCI Scopes Manual offers detailed information about how every sort of work should be classified. This allows underwriters to more confidently analyze the risk of each individual business.
The NCCI Scopes Manual is a copyrighted material. The only way to obtain a copy of this manual is to buy it directly from NCCI. There are some states who do not partner with NCCI and they create their own manuals. Typically these states provide those manuals at no charge to the business, but they rarely provide as much detailed information. This does not benefit some business who have employees in many classification codes or that operate in a unique industry.
How Do Insurance Companies use the Scopes Manual?
Each insurance carrier has their own formula for how the determine if they are going to offer coverage to a business and if they do offer coverage, how much to charge that business for premium. Errors in placing businesses in the proper classification code are the single most common reason for a business owner to become disgruntled with their insurance agency or carrier. Being classified improperly ups the likelihood of a mid term audit and can cost a business additional premium at the end of the term if they were placed in a less risky code.
Insurance Agencies are true middle men in-between an insurance carrier who provides a product and a business who needs that product. They act on behalf of the business and with the partnership of the insurance carrier. Business owners look to their agency to be their insurance expert and to give them somewhat unbiased advice. The insurance agent is expected to prevent mistakes from happening when purchasing insurance coverage. One of the main mistakes businesses make when purchasing workers compensation insurance is to classify their business improperly. In some ways this is the responsibility of the agent, but the agent can only act upon the information given to them by the business owner or whoever the representative within the business interacts with them. This is why it is extremely important to speak long and honestly with their agent when purchasing insurance and throughout the year when anything about their business changes.
Businesses can use the NCCI Scopes Manual to make sure their agent and carrier are classifying them properly and if they are not partnering with an agent and are shopping around for their policy alone. This can be an effective way to save money on premium by purchasing direct from the carrier, but you are taking an additional risk by possibly not buying enough coverage, not classifying your business properly, and by leaving gaps in coverage you may not have the insight to predict.
If you are looking for the Scopes Manual, Workers Compensation Shop provides the classification codes here in Alphabetical and Numerical Organization:
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