Contracting Classification Premium Adjustment Program Credits -
The Contractors Premium Adjustment Program provides a premium credit for construction industry employers who pay high hourly wages. It applies only to the construction class codes--it does not apply to office workers or other non-construction employees. The amount of your credit depends on how your average hourly wage compares to the your states average hourly wage. There is a mathematical formula that is used to calculate the exact credit applicable to each policy. The calculation is generated by the NCCI based upon the payroll information supplied by the insured. This credit is not available in all states. You must check with your regulatory authority as to is available application to your workers compensation policy.
The Contracting Classification Premium Adjustment Program (CCPAP) gives specific premium discounts to those employers who pay higher than average wages to their employees. These employees must be classed in listed, special contracting class codes. As mentioned above, not all workers comp class codes qualify for this credit application. For example you'll find codes for carpentry, electrical contracting, plumbing and concrete work along with others to be included within this program. In general the codes used for this workers comp policy credit are approved by each state.
This program was created by NCCI and Florida was the first state to approve its use in 1984. It was developed to address the inequity between higher and lower paying employers found in the same job classifications. For example say you have two employers in the concrete construction business. One employer pays his employees $15.00 per hour and the other employer pays his employees $25.00 per hour. Since workers comp premiums are based on a rate per 100 of payroll the second employer will pay a much higher premium for the same amount of work and the same amount of exposure to risk of injury for his employees. Hence the development of the Contractors Premium Adjustment Program as a way of leveling out the workers comp playing field.
How do you qualify for this credit? It's pretty simple. The employer must complete and submit a Contractors Premium Adjustment Program application to their rating authority within a specified period of time. After review and verification by the rating authority a premium adjustment credit will be developed and the rating authority will provide that credit to the employers workers compensation insurance company for application to their policy.
Remember, this credit is not available in all states but may be available in both NCCI and Other Rating Authority states. Here is a list of the states that had a form of this credit program available as of 2008:
Be sure to check with your individual state regulator to verify if this credit program is available in your state!