I recently had a question from one of the Agency’s clients asking why all their subsidiaries share a common work comp experience modifier when they are each in different industries. While I sympathize with the client’s desire to have separate experience modifier for each entity, that’s not the way the NCCI rules are written. They look only at the issue of ownership – the thinking behind that is one of management control. (The same is true of non-profits which have no “owners” so they look solely at who controls what.) Who gets to make the decisions regarding how a company is run? If it is the same person, group or company that controls the various entities, then they are combined for work comp experience rating purposes. It doesn’t matter what industries are involved – if an ice cream shop and a fireworks manufacturer share common ownership, they are combinable for experience rating purposes.
I’ve seen several accounts here at Crane over the years where businesses in unrelated industries are combined for the experience mod. One that pops to mind is an account that has contracting, wholesale and manufacturing operations in several different states.
However, keep in mind that combinability for experience rating purposes doesn’t mean that all the entities need to be on the same policy. Each entity could have their own policy if desired. While they would continue to share the same experience modifier, you might find an underwriter that is willing to give favorable pricing on the lower-risk/lower-loss company while the problem child subsidiary gets placed with a completely different company.
And while I’m sure there have been people who have figured out how to disguise common ownership through clever and complex corporate structuring, that is a lawyer question, not an insurance one since it could also affect tax, estate and other issues. You don’t want to be accused of intentionally deceiving either the NCCI or your insurance carrier as that can bring a whole host of new problems into your life.