Workers' compensation is a game of rules. Like all othergames—from Monopoly to football—if you don't know the rules, you'regoing to find it difficult to win.

We don't normally think of insurance as a “game,” but youdefinitely have to know the rules in order to get the best resultsfor your clients. These rules are readily available. But it's beenmy experience that agencies rarely have these rules at theirdisposal. They choose instead to rely on experience to guide themto what they think is correct.

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It's true that experience is a great resource. But when thingschange, as they often do, experience can become more of a liabilitythan an asset. That is why it is imperative that agents have accessto the manuals that govern a workers' compensation policy.

In states governed by NCCI (National Council on CompensationInsurance), there are three key manuals:

1) Basic Manual

This is the manual that contains information on the basics ofworkers' compensation. Here you will find the rules for classifyinga business. What are the standard inclusions and exclusions forclassifications? What money that is given to employees getsincluded or excluded from the workers' comp premium calculation?And so on.

Also of critical importance in the Basic Manual: What are therules governing how classifications can be changed both during andafter a policy period?

2) Experience Rating PlanManual

The rules covering the experience modification factor arevast. This manual explains in detail each of the elements ofthe experience modification factor and how they are calculated. Forinstance, if you are going to cancel and rewrite a workers' comppolicy, how can you know what policy periods will be included on anexperience mod?

If one of your clients buys a business, what are the rulesrelating to their separate experience mods? (Hint: they are almostcertainly required to be combined.)

Also in the Experience Rating Plan Manual are the rules relatingto which businesses are required to have an experience mod and whatchanges can be made to the mod during the policy period.

3) Scopes® Manual

For all of the different types of business that exist, NCCI hasdefined just over 600 distinct classifications. This manualcontains each of those classifications, spelled out in detail. As Imentioned in my March column, it is critically important that your client beclassified correctly; otherwise, they are in grave danger of beingovercharged and you are in grave danger of losing a client.

The Scopes ® Manual has a wider reach than the two manualspreviously mentioned, as it covers 42 states and the District ofColumbia. The exceptions are Wyoming, North Dakota, Michigan,Washington, Texas, Pennsylvania, New Jersey, and Delaware.

These manuals also include the exceptions for each of the statesthat are governed by NCCI, as well as several states withindependent bureaus. These exceptions are critically important, andnot knowing them can be costly.

As a simple example, the national rule is that pay for vacationtime is included for workers' compensation premium determination.However, that's not the case in Kansas (provided you can documentwhat portion of the payroll was paid during vacation time). As youcan see, it's not hard for money to add up quickly for yourclient.

The NCCI manuals are available online and in print for a fee.However, in several states that publish their own manuals, they areavailable at no cost in PDF format.

These manuals provide the basis for all workers' compensationpolicies, and I've barely scratched the surface of the amount ofinformation contained in those hundreds of pages. Without access tothis information, it's impossible to know for sure if your clientsare having the rules applied correctly to them or not. If you arenot able to gain access to them, log in to your bureau's web sitetoday and find out how.