NCCI publishes the classification codes, the rules governing how payroll is assigned to them, and the experience rating plan used to calculate modifiers. It also produces the annual State of the Line report on the financial condition of the line.
Several states operate independent bureaus instead, each with its own classification system and rules. California, New York, and Pennsylvania are among the best known. Four states (North Dakota, Ohio, Washington, and Wyoming) run monopolistic state funds, where coverage is bought from the state rather than from private carriers. A business operating across state lines can find the same work classified differently in each.
NCCI is not an insurance company and does not sell policies. In most of its states it files advisory loss costs, and each carrier applies its own multiplier to reach the rate it charges.
Audit rules are not universal. The manual that governs an audit depends on the state, which is why questions about specific limits and exclusions have to be answered per jurisdiction.
Frequently asked questions
Is NCCI an insurance company?
No. NCCI is a rating and data organization. It maintains classification codes, files loss costs, and calculates experience modifiers, but it does not sell or issue workers' compensation policies.
Does NCCI set workers' comp rates?
In most NCCI states it files loss costs, which regulators approve, and each carrier adds its own expenses and profit to arrive at its rate. The final rate on a policy is the carrier's, built on NCCI's loss cost.
What is an NCCI Risk ID?
A Risk ID is the number NCCI assigns to identify a business for experience rating. It ties the business's payroll and claim history together across policies and carriers so its experience modifier can be calculated.
Which states don't use NCCI?
States with independent rating bureaus, such as California, New York, and Pennsylvania, and the four monopolistic state-fund states: North Dakota, Ohio, Washington, and Wyoming. Some other states use NCCI for part of the work while keeping their own bureau.