Insurance companies use workers' compensation class codes to classify types of work by level of risk to determine what rates to collect from employers, according to Class Codes. The National Council on Compensation Insurance, or NCCI, and each state create the class codes and assess their loss history to assign each code a base rate.
The NCCI created a database that has over 700 standard class codes as of December 2015, as reported by Insureon. The codes usually have three or four digits and identify jobs by both the duties performed and the risk level of those duties. States assign a base rate to each code, which insurance companies then use to collect workers' compensation premiums from employers. The rates for risky jobs are higher than those for jobs considered safe; for example, an employer pays less in insurance premiums for clerical employees than for employees who spend time working on roofs.
Most states use the NCCI system, with the exception of six, although some states add special classifications, says Insureon. Each state has its own Department of Insurance, where state-specific class codes and rates are found. NCCI also publishes the Scopes Manual, which is available for purchase and lists each class code and rate by state.