What Are Arizona Worker’s Compensation Class Codes?

05 Feb What Are Arizona Worker’s Compensation Class Codes?

The Worker’s Compensation Class Codes in Arizona refer to the job category code needed for calculating what the insurance premium rate will be that employers must pay to cover workers in case of job injuries. These class rates are suggested by the National Council on Compensation Insurance (NCCI) to each member state, including Arizona, as part of the calculation to figure out insurance rates for employers to pay. Each class code stands for a type of job that employees might work.

Sample Compensation Class Codes

One example of the class code for coal mining in Arizona would be 1016. The code 2702 in Arizona stands for logging or lumbering. The industry of manufacturing explosives or ammunition, specifically projectile or shell manufacturing, is coded as 3639. Newspaper publishing is class-coded as 4304.

These class codes may stay the same for some time, including its use in several other states, but may change over time too. You can view a 2016 sample numerical NCCI code list here, which starts at the number 0 and progresses to 9985.

Each business in Arizona should stay up to date with any changes of class codes which may affect insurance premium rates

To include a class code within the formulaic calculation that gives the premium insurance rate for employers to pay, a value is applied at both the lowest rate and the highest rate. Some rates by class code are low because they have a low-risk history for filing claims. Others have high rates because of the high risk for on-the-job injuries. Here is a quick look at 2017 rates in Arizona.

3724 Garage Door Installation Low rate = $3.94 High rate = $5.32
5022 Masonry Low rate = $9.15 High rate = $12.35

 

The formulaic calculation includes the employee salary for each $100 in pay, times the class rate as given above in the short table. That, in turn, is multiplied with the experience modification factor (MOD) and the result of this calculation gives the premium rate the employer pays. The MOD is figured out by percentage of claims made against the employer over three years and can also be an overall view of industry claims in the state, including a forecast of future claims.

The NCCI Classification Codes and Statistical Codes Manual

This annually-published manual is used by state governments, employment and insurance lawyers, worker’s compensation lawyers, and other relevant professionals who need to stay up to date with class codes. The manual gives all current and new codes by state, including a list of discontinued codes and dates of termination.

Each business in Arizona should stay up to date with any changes of class codes which may affect insurance premium rates. The company’s worker’s compensation lawyer, as one major source, would usually receive notices of any class code updates outside of buying the manual each year.

It is important to know the class code for each worker employed in the same company. Not all jobs within the work infrastructure are the same code, such as office administrators versus construction workers. Class codes determine what employers must pay.

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