Washington Administrative Code › Title 296 - Labor and Industries, Department of › Chapter 296-17 - General reporting rules, audit and recordkeeping, rates and rating system for Washington workers' compensation insurance › Section 296-17-31011 - Classification system and plan

Current through Register Vol. 24-14, July 15, 2024
Washington law
(RCW
				 51.16.035)
requires us to classify
				occupations or industries by their level of hazard, in accordance with
				recognized principles of workers' compensation insurance which encourage safety
				and facilitate premium collection. The classification system and plan in
				Washington are based on insurance principles similar to those in other states
				and also reflect Washington's industries and workers' compensation laws.
(1)
What is the workers' compensation
			 classification system?
The rules in
chapter 296-17 WAC
are the workers'
				compensation classification system. These rules:
* Define how we apply the classification plan to classify
				businesses by their degree of hazard.
* Assign premium rates that fairly represent employers' risks
				so that the premiums we collect cover all claim costs.
Our classification system follows recognized insurance
				principles described in
WAC
				296-17-31029 Insurance
				principles
. These principles help ensure that employers are properly
				grouped and fairly rated.
We group industries that share similar risks together for
				common rating. Employers with similar risks tend to have workplace injuries
				with similar frequency, severity, and cause. Higher hazard industries are more
				likely to have workplace injuries, and the injuries are more likely to be
				severe.
By analyzing the history of injuries and costs for each
				classification grouping, we can reliably project future costs of claims for a
				classification. We adjust premium rates yearly so that we collect enough
				premiums to pay for these projected costs. Employers engaged in higher hazard
				industries, such as logging, will pay higher premium rates than employers
				engaged in lower hazard businesses, such as retail store operations.
The workers' compensation classification system rules apply to
				all businesses unless another treatment is specifically provided for in the
				classification plan (see subsection (2) of this section).
(2)
What is a workers' compensation
			 classification plan?
The rules in
chapter 296-17A WAC
are the workers'
				compensation plan. These rules group employers into risk classifications based
				on the nature of a business. We do not classify and rate individual jobs or
				occupations (see
Example 2, WAC
				296-17-31015 General
				inclusions
). Instead, each classification describes the types of
				businesses and operations it includes, and the classification is a blend of
				exposures and risks representing the combined work for all of the businesses in
				the classification. Sometimes a classification may also reference certain
				operations (tasks, processes, activities, etc.) excluded from the
				classification. We refer to the boundary between what is included in and
				excluded from a classification as the
* scope*
of the
				classification.
The classification plan in
chapter 296-17A WAC
provides descriptions and scopes for businesses and industries found in the
				state of Washington.
Classifying by the nature of business:
* Makes our classification plan responsive to industry
				innovation and change.
Note:
When businesses in a particular industry are
				grouped together in the same classification and new practices or technological
				improvements change the level of hazard for the industry, the classification's
				rates automatically adjust in response to the changes.
* Ensures our classifications represent businesses with similar
				levels of hazard, which in turn promotes fair and equitable
				rates.
Statutory Authority: RCW 51.06.035,
				  
											51.08.010,
				  51.04.020. 07-12-045, §
				  296-17-31011, filed 5/31/07, effective 7/1/07. Statutory Authority:
				  RCW
				   51.16.035,
				  51.04.020. 00-14-052, §
				  296-17-31011, filed 7/1/00, effective 7/1/00. Statutory Authority:
				  RCW
				   51.16.035. 98-18-042, § 296-17-31011,
				  filed 8/28/98, effective 10/1/98.