NCCI
The National Council on Compensation Insurance, which develops workers comp classification codes, calculates experience mods, and provides rate recommendations.
What It Is
NCCI (National Council on Compensation Insurance) is the primary rating organization for workers compensation insurance in the United States. NCCI collects data from insurers, develops workers compensation classification codes, calculates experience modification rates, and provides advisory rate recommendations to state regulators.
NCCI operates in 38 states and the District of Columbia. The remaining states have independent rating bureaus that perform similar functions — notable examples include California (WCIRB), New York (NYCIRB), Delaware, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, and Wisconsin.
NCCI maintains the Scopes Manual, which contains the classification system used to categorize employers by the type of work they perform. Each classification code has an assigned rate per $100 of payroll, which serves as the starting point for premium calculation.
Why It Matters for Brokers
Brokers must understand NCCI's role because it directly impacts every aspect of workers compensation placement and management. Classification codes determine base rates, experience mods affect premium multipliers, and NCCI's data collection drives the entire rating system. When a client's classification code is wrong, the premium is wrong — and it may not be discovered until an audit. Brokers should proactively review classification codes and challenge incorrect assignments through the NCCI dispute process.
Real-World Example
A general contractor is classified under NCCI code 5403 (Carpentry) with a rate of $8.45 per $100 of payroll. However, the contractor's primary operations are project management and supervision, which should be classified under 5606 (Contractor — Project Manager) at $2.85 per $100. With $2.4M in payroll, the difference is significant: Code 5403 produces a manual premium of $202,800, while Code 5606 produces $68,400 — a $134,400 difference. The broker identifies the misclassification and files a reclassification request with NCCI, saving the client $134,400 annually.
Common Mistakes
- 1Assuming all states use NCCI without checking whether the client operates in an independent bureau state with different classification codes and rates.
- 2Not reviewing classification codes assigned by the carrier to verify they match the client's actual operations.
- 3Failing to understand the NCCI experience mod calculation well enough to identify errors in the mod worksheet that could be disputed.
How brokerageaudit.com Handles This
Policy Checker identifies NCCI classification codes on workers comp policies and cross-references them against the client's operations description to flag potential misclassifications. It also identifies the applicable rating bureau for each state on the policy. Submission Intake includes NCCI class code lookups to ensure accurate classification on new submissions.