WC Codes – be careful what you ask for

There are roughly 1,000 different work comp codes in the NCCI Scopes manual. It pays to put some effort into determining the correct codes for your clients, but sometimes things aren’t what you’d expect.

One of my favorite examples is the Iron & Steel Frame Structures construction class. There are two codes for this class. Code 5040 is for work over two stories and code 5059 is for under two stories.

The initial impulse is to think that the work on buildings taller than two stories would be more dangerous – the farther you fall, the more it hurts.

But that doesn’t match reality. The assigned risk rate for code 5040 – the over two story class – is $44.61 per hundred of payroll in Missouri. However, the rate for code 5059, the under two story class, is $113.80 – two and one-half time higher!

How could this be? Simple. Remember that rates are based on the actual historical loss experience reported to the NCCI for all risks in the state using that class code.

The over two story work is done by professional firms, with proper equipment and trained workers. The contracting companies that do this type of work know what they are doing.

In contrast, the under two-story class draws a lot of “cowboy” contractors who often don’t have the experience, equipment or training to safely handle structural steel. Inevitably, those issues reflect in the statewide loss experience for employers in this type of business.

This is an extreme example, but it does show that you can’t always take things at face value.

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