Workers' Comp Class Codes With AI: Check the Code Against Job Duties

AI can help check a workers' compensation class code against a business's job duties by listing each duty, matching it to candidate codes and quoting the rule text. It cannot confirm the code. The agent confirms it against the current rating manual for that state, and the carrier or bureau can still re-class at audit.

The reason to bother: payroll sits under the wrong code, premium follows it, and the mistake surfaces at audit when it is expensive. A lookup page tells you what codes exist. The method below tests the insured's actual duties against the code wording and the rules around it, then records who signed off.

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Why a lookup list is not a classification check

Online class code finders do a useful first job: you type "roofing" and see candidate codes. Stop there and three things go wrong.

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• They match words, not duties. "Landscaping" can mean new landscape installation or lawn maintenance, which NCCI's manual puts in different codes (0042 and 9102). NCCI's inspection research found policies coded 0042 being moved to 9102 because the work was maintenance, not installation.
• They ignore the structure of the rules. In NCCI-based rule text, subject to stated exceptions, the business of the employer is classified, not each employee or occupation within it. Basic classifications describe what the employer does. Standard exception classifications cover occupations common to many businesses, such as clerical office work, and apply only when conditions are met.
• They leave no record. When the insured, the carrier or an auditor asks why this code, "a website said so" is a poor answer.

NCCI's own inspection research shows why a real check matters. In its 2020 to 2022 data, more than 60% of inspected policies with 8810 (clerical) or 8742 (outside sales) as the governing code had the governing code changed; in its 2023 to 2025 data the figure was about 36%.

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The method here puts the duties first, treats the rule text as the test and keeps one page of reasoning per insured. Not every state uses NCCI's manual, and states that do can modify its rules, so every rule below is something to confirm in the manual that applies to the policy. The rule wording quoted in this tutorial comes from one state's published classification rule, which says it is based on NCCI's Rule 1 and modified for that state, and the code titles come from that state's NCCI-reprinted classification list. Treat both as a stand-in for your own manual, not as the rule for your policy.

The structure the check follows

Four ideas let you ask the AI the right questions and spot wrong answers. The wording below follows the sample state rule; check it against your own manual.

1. Basic classification: describes the business of the employer. The procedure aims "to assign the one basic classification that best describes the business of the employer within a state".
2. Governing classification: at a job or location, the basic classification, other than a standard exception, with the greatest amount of payroll. Only where no basic classification applies does the standard exception with the most payroll govern. Miscellaneous employees, local managers and executive officers who regularly do workers' duties follow it.
3. Standard exception classifications: occupations common to many businesses. The sample rule lists clerical office employees (8810), clerical telecommuters (8871), commercial drivers (7380), outside salespersons or collectors (8742) and automotive salespersons (8748). They apply only when the basic classification's wording does not already include those employees, and only if the employee meets the duty and site conditions. Some basic codes, such as the one for physicians, already include clerical staff.
4. Payroll division (interchange of labour): an employee's payroll may be divided between properly assigned basic classifications only if the employer keeps records showing actual payroll by classification. "Estimated or percentage allocation of payroll is not permitted"; without records, the whole payroll goes to the highest-rated classification that covers any part of the work. The standard exceptions 8810, 8871, 8742 and 8748 cannot be divided this way.

Home-working clerical staff have their own standard exception, Clerical Telecommuter Employees (8871). In the sample rule, someone splitting time between office and home is coded 8871 if more than half their working time is telecommuting and 8810 otherwise. NCCI notes that 8871 is not available in every state where it provides ratemaking services. That is the kind of detail that differs by state and edition, which is why the sign-off step checks the manual edition rather than trusting any summary.

The duty-by-duty method in six steps

1. Collect duties in the insured's own words. From the application, a call or a site description. Ask what people actually do in a normal week.
2. Break the business into operations and roles. A bakery with a shop front and a wholesale run may be two operations. A plumber with an office assistant is one operation with a standard exception role.
3. Ask the AI for candidate codes, per duty, with a reason. Not "what is the code", but "which codes could this duty fall under and why".
4. Pull the scope or rule text for each candidate from the manual, and paste it into the check. This is the step that stops the model inventing wording.
5. Test each duty against the quoted text, mark fit, partial fit or no fit, and note exclusions.
6. The agent signs off against the manual edition for the state and policy date, and records the decision, the reasons and any question for the carrier.

The prompt for step 3

You are helping an insurance agent check workers' compensation classifications. Do not state a final code. Below are an insured's duties in their own words.

For each duty:
1. Name 1 to 3 candidate classification codes or code families, with the code's short title as you understand it.
2. Say in one sentence why each might apply.
3. Say what fact about the duty would change the answer (for example: height of work, whether goods are made or only sold, whether drivers are included).
4. Mark anything you are unsure of as UNSURE. Never guess a code number; if you do not know, write UNSURE.

At the end, list any duties that look like a standard exception role (clerical office, outside sales) and any that look like they may belong to a different operation altogether.

Insured's duties:
[paste]

The rule "never guess a code number" matters. Models sometimes produce plausible numbers attached to the wrong title.

The prompt for step 5

Here are three things: (A) the insured's duties, (B) candidate classification wording copied from the rating manual, (C) any rules copied from the manual about clerical, outside sales, governing classification or payroll division.

Using ONLY the text in B and C, test each duty in A. Output a table: duty | candidate code | quoted phrase from B or C that supports or contradicts | FIT / PARTIAL / NO FIT.
Then list: (1) duties that fit no candidate, (2) conflicts between candidates, (3) questions to put to the insured, (4) questions to put to the carrier.
If the pasted text does not answer something, say "not covered by the text provided".

Because the model can only work from text you pasted, it cannot cite rules that do not exist. It can still misread them, which is why the agent reads the quoted phrase against the source.

A twelve-person plumbing firm, checked role by role

Say an agency is reviewing a twelve-person plumbing business. The owner describes: nine plumbers fitting and repairing pipework in homes and small shops; one apprentice who also drives the van to the merchant; an office manager and a bookkeeper who work in the office; and the owner, who quotes jobs on site and does some pipe work himself.

The code numbers and notes come from one state's NCCI-reprinted list and must be checked in the manual for your policy's state. Two lines deserve a closer look. The office staff first: the sample rule allows 8810 only for a workstation physically separated, by floors, walls, partitions, counters or other barriers, from areas such as shops, warehouses and places where inventory is kept. A desk in the corner of the pipe store fails that test, whatever the job title.

Then the owner. A tidy-looking answer would put his quoting under outside sales (8742) because he "quotes jobs". The sample rule says 8742 is not assigned to employees who perform job-site measurements or inspections to prepare bids for a construction contractor; those go to 8720, construction job site salespersons and estimators, if your manual treats the firm's work as construction. It also bars dividing payroll between 8720 and a construction code at any single job site: where he measures and then fits pipe at the same house, that site's payroll goes to the plumbing code. The agent's note reads: estimating-only visits are a candidate for 8720 and working visits stay in the plumbing code; any split needs records by job site; ask the carrier how the owner's own payroll is treated on this policy; recommend the insured start a job-by-job time record.

Result for the premium conversation: the agency now knows that ten of the thirteen people (the plumbers and the apprentice) sit in one code without argument, the two office staff need a site check, and the owner needs a ruling and a record-keeping fix. That is a far better renewal conversation than "the code is fine".

Six more checks, each from a different business

A restaurant with a delivery driver

The question is whether driving sits inside the restaurant code or apart from it. Read the restaurant classification's wording for drivers. Where it does not include them, the sample rule sends drivers to the commercial drivers standard exception (7380), and its examples allow payroll to be divided between a basic code and 7380 only where records show actual time in each. A duty list should capture hours per week driving and whether the driver also works in the kitchen. Ask the AI: "List what records we would need to divide this employee's payroll between two classifications, according to the text below."

An auto repair shop

In the sample list, 8380 (automobile service or repair, with drivers) includes parts department employees and service writers. Automobile salespersons are rated separately (8748, a standard exception), towing for others and roadside assistance are rated separately, and body repair has its own code. So a shop that repairs cars, runs a parts counter, tows for the public and sells a few used cars may need several lines on the policy, not one. Prompt the AI to sort each duty into repair, parts, towing for others, body work or selling, then check each group against the code notes in your manual.

A one-person consultancy hiring its first employee

One error to avoid is applying a high-risk code because the business owner once did site work. Take the duties of the new employee, not the owner's history. If they work from home and do only clerical tasks, the clerical rules apply, including the telecommuter code where your state has it; the sample rule requires a clerical work area in the employee's home, separate from the employer's premises. Record the home-working arrangement and the share of time spent at home in the file.

A cleaning company with a supervisor who works on site

Supervisors who clean alongside the crew are not office clerical, whatever the title says. Ask the AI to list the tasks of the "supervisor" separately: quoting visits, scheduling in the office, inspecting sites, cleaning. The sample rule disqualifies an employee from 8810 if their duties involve outside sales or representation, direct supervision of non-clerical staff outside an eligible office, physical labour, or work exposed to the operating hazards of the business. A supervisor who cleans or inspects on site fails on more than one count.

A construction firm that also sells materials

Two operations may be separately classified, but only when the manual's conditions are met. In the sample rule, construction and mercantile operations are among those that can carry more than one basic classification. For other additional operations it sets three tests: the operation could exist as a business on its own, it is housed separately (another building or floor, or partitioned off so the principal business's staff are protected from its hazards), and it has proper payroll records. If an additional operation fails those tests, rates decide: a lower-rated operation goes into the principal business's code, an equal or higher-rated one gets its own. The AI can help list what makes the operations distinct; the agent then reads the manual's rule on separate operations. See getting payroll and subcontractor records ready for audit for the records side.

Your own agency's policy

An insurance agency is itself an employer with a code. NCCI's 2022 inspection article reported that, among inspected policies with 8810 or 8742 as the governing code that were changed, more than half were reassigned to 8723, Insurance Companies, Including Clerical and Salespersons, and most of those employers were insurance agencies. NCCI lists brokers, carriers, exclusive agents and independent agents among the businesses that code covers; it was established in 2012, and before then such operations were typically coded 8810 or 8742. Run the duty check on your own agency's policy before you run it on anyone else's.

The sign-off: what the agent records

The record is one page per insured, saved with the policy file. It does three jobs: proves the check happened, lets a colleague take over, and answers the auditor.

CLASSIFICATION CHECK
Insured: [name]         Policy period: [dates]        State: [state]
Prepared by: [name]     Date: [date]
Manual and edition checked: [name, edition, effective date]

Duties source: [application / call dated X / site visit]
Operations identified: [list]

Code | Operation or role | Payroll estimate | Rule text relied on (quote) | Fit
...

Standard exceptions used: [8810 / 8742 / none], conditions met because: [reason]
Payroll division: [records exist / none, insured advised]
Open questions for carrier: [list]
AI use: candidate suggestions only; all codes and quoted text verified in the manual by [name].
Agent sign-off: [name], [date]

The AI use line is important. If a dispute ever arises, you want the record to show that a person verified the codes against the source, and which edition. Do not store the insured's confidential details in a consumer account; use a business plan where content is not used for training, and follow your agency's own data rules.

What goes wrong, and how it shows up

• A wrong code number with a convincing title. The model labels 5190 as plumbing; in the sample list, 5190 is Electrical Wiring, Within Buildings and Drivers. Defence: the "never guess a number" instruction, and verifying every number in the manual.
• Quoted wording that is out of date. A rule that changed at the last revision. Defence: paste text from the current manual edition and record the edition on the check.
• Choosing by rate. The check drifts towards the cheaper code. Defence: write the duty list before looking at any rates.
• Letting a job title decide. "Office manager" who also works on the shop floor. Defence: duties, not titles, as the input.
• No payroll split records. The check says "divide", but the insured keeps no records, and an auditor will refuse an estimate. Defence: tell the insured now and record that you did.
• Over-trusting a one-size answer. The AI answers from NCCI's rules where the policy follows a different manual, or from one state's version where yours differs. Defence: always name the state and manual in the prompt, and paste the rule text rather than asking the model to recall it.

Introducing it across an agency

Start with renewals, not new business, because you already have payroll and duty history to test. Pick ten policies, run the six steps on each, and note three numbers: time per check, number of codes changed, and number of questions sent to carriers. An experienced account manager might take 40 minutes per check the first time and 15 once the template is familiar, illustratively. If a pattern of misclassification appears, for example clerical codes used for staff with field duties, that is a finding worth acting on with the insured before the carrier's auditor finds it.

Create a shared prompt document so every account manager uses the same wording, and a shared folder for the check pages. The renewal routine in automating insurance renewals has a natural slot for this check 60 to 90 days before expiry, and comparing policy wordings with AI uses the same paste-the-text discipline.

Questions to ask the insured, ready to send

Hello [first name],

Before we renew your workers' compensation cover, I want to make sure each person's work sits under the right classification. Please tell me, for a normal week:
1. What each person does, in a sentence or two (job titles alone are not enough).
2. Whether anyone works in more than one area, for example office and site, or shop and deliveries, and roughly how their time splits.
3. Whether you keep timesheets or job records that show that split.
4. Whether anyone works from home, and what they do there.
5. Anything you do that is not on last year's application, such as selling materials, subcontracting work, or hiring drivers.

Thank you,
[your name]

Answers to these go straight into step 1 of the method. Questions 2 and 3 are the ones most likely to change a classification or prompt a record-keeping fix.

A quick sum: why one misplaced employee matters

NCCI explains the basic sum: the rate for each classification, approved by the state, is applied per $100 of payroll, so each $100 of payroll is multiplied by the rate, and for employers that qualify, the experience modification then adjusts the result. Rates differ a lot between clerical and field codes, which is why a misplaced role is worth catching. Take invented rates purely for arithmetic: a field code at $6.50 per $100 of payroll and a clerical code at $0.30. An employee with $50,000 of payroll costs about $3,250 a year under the field code and $150 under the clerical code before any modification, a gap of $3,100.

Now see both ways it goes wrong. If a person with field duties is placed in clerical, the insured pays $3,100 too little at inception and an audit can later re-class the payroll, with a bill for the difference. If a true clerical employee is placed in a field code, the insured overpays by $3,100 every year until someone notices. The first mistake hurts at audit; the second quietly costs money and trust. Both are reasons for a written duty check, and neither is solved by choosing the cheaper code.

An exercise: testing a duty against quoted rule wording

Here is how the step 5 test looks on a small scale, using wording quoted from the sample state rule. Your manual's wording may differ, which is the point of pasting it.

(A) Duty: "The office assistant books jobs, answers the phone and also drives to customers' houses twice a week to measure for quotes."

(B) Quoted rule text, 8810 (sample state rule): duties "must be limited to" activities such as "Creation or maintenance of employer records, correspondence", "Telephone duties" and "Data entry or word processing". Employees "are disqualified from assignment to this classification if their duties involve: (i) Outside sales or outside representation".

(C) Quoted rule text, 8742 (sample state rule): "This code is not assigned to employees who ... (v) Perform job site measurements or inspections to prepare bids for a job for a construction contractor."

Test: "books jobs, answers the phone" = FIT with B. "drives to customers' houses to measure" = NO FIT with B (outside work) and NO FIT with C (site measuring for bids is excluded from outside sales).
Open question for carrier: if the employer counts as a construction contractor, does the measuring put her in the estimator code (8720), and because clerical payroll cannot be divided under the rule, how is her whole payroll assigned?

What you learn is not simply "not clerical". It is that one sentence in her duty list needs a ruling and a record. The AI saved you from reading the whole manual to find the issue; the agent and the carrier settle it. Without the quote, a model asked for "the code" is likely to answer "clerical, 8810" and stop there.

Telling the insured when a code changes

If the check moves payroll to a different code, the insured needs a plain explanation, not a surprise on the invoice. A short email avoids arguments.

Subject: A change to how we classify one role on your policy

Hello [first name],

When we checked each role against the classification rules, we found that [role] does [duty] as well as office work. Under the rules, that means their payroll sits in [code title] rather than clerical.

What this means: your estimated premium moves from $[x] to $[y]. Under the classification rules in the manual for your policy, clerical payroll generally cannot be split with other kinds of work, so a person who does both is classified by the other work.

If we have the duties wrong, or the site work has stopped, tell us and we will recheck and put the question to the carrier. I would like to speak this week so the renewal is correct from the start.

[your name]

Have AI soften or shorten that draft if you wish, but check every figure and every sentence about the rules yourself.

Time and cost: what an agency can expect

Illustratively, a first duty check on a typical small insured takes 30 to 45 minutes of an account manager's time, including collecting duties and reading the manual text. The AI steps take five minutes of that. Where the saving appears is in step 5, which would otherwise be hours of reading rule text, and in the one-page record, which is faster to write from a structured table than from memory. The costs are a business-plan subscription for whoever runs the prompts (see the vendor's current pricing page for the exact figure), staff time to learn the template, and a refresher each time the manual edition changes.

For an agency with 120 commercial accounts, checking a quarter of them each year is a practical start: 30 checks, about 20 hours in the first year, and a clear list of insureds with record-keeping gaps. The cost of AI in a small insurance brokerage tutorial puts that against the other costs of the first year.

When the insured disagrees with the check

Some owners will push back: "We have always been in that code" or "my broker last year said it was fine". Handle it with the record, not with opinion. Show the duty list they gave you, the quoted wording, and the point where the two diverge. Invite them to correct the duty list if it is wrong, because the check is only as good as its input. If they hold firm on duties that the wording does not fit, put the disagreement in writing, send the question to the carrier or bureau and let them rule. Never move a code to keep a client happy, and never move it to the cheaper option because the AI offered it.

A related trap is the insured who describes the business as it was five years ago. Ask what has changed since last year: new services, new premises, subcontractors brought in house, a delivery run added. Changes in operations are the most common reason a long-standing code stops fitting.

Checking the process works

After a quarter, sample five completed checks and ask: does each have the manual edition recorded; can you find the quoted rule text; does the code on the policy match the check; were any open questions answered by the carrier; did any audit result differ from the check? If audits differ, look at which duty was misunderstood and add a question for the insured's list. If you find a check with no quote and no edition, the process is not working, however good the AI answer looked.

If you want the check set up inside your own agency workflow, my AI implementation consultation covers mapping the steps and the sign-off, though the manual and the carrier remain the authority on every code.

Class code and AI questions

Can AI assign the final class code?

No. A model can propose candidate codes from a description of duties and point to the rule that matters, but it can mislabel codes or quote outdated wording. The agent confirms each code against the current rating manual for the policy's state, and the carrier, or the rating bureau when it inspects, can still change it.

Why not just use a class code lookup website?

Lookup pages list codes and short descriptions, which helps you find candidates. They do not test your insured's actual duties against the scope notes, exceptions and rules about governing classification. The duty-by-duty method adds that test and leaves an audit trail.

What if two codes seem to fit the business?

NCCI-based rules aim to assign the one basic classification that best describes the business, with separate treatment for standard exceptions such as clerical staff and outside sales where the conditions are met. If two seem equal, record both, ask the carrier or bureau for a ruling, and do not choose by the lower rate.

Is a change of code retroactive?

It depends on the manual that applies, the carrier and the direction of the change, and a premium audit can re-class payroll for the period it covers. Do not promise the insured either answer. Ask the carrier how it handles a correction on this policy, and put its reply in the file.

Further reads

• Does Your Business Insurance Cover AI Mistakes? — Does cover respond when AI gets something wrong?
• Contractor Insurance Renewal: Gather the Figures Before Your Broker Calls — The insured's side: the payroll figures to gather before renewal.
• AI Submission Intake: Stop Re-Keying Data Into Insurer Portals — Stop re-keying the duty and payroll data into insurer portals.
• AI Email Triage for Professional Firms: Sort, Summarise, Draft — Route insured questions before they reach the agent.
• Where AI Saves Time in a Small Insurance Brokerage — Other agency jobs where AI saves time.
• AI Compliance Checklist for Small Businesses: What Applies to You — Wider compliance checks for small firms.
• AI Tools and AI Development: The Complete 2026 Guide — the AI hub, including every tutorial in the AI-for-business series.

Sources: NCCI articles on its Classification Inspection Program (top reclassified codes, 2022 and 2025), NCCI on telecommuting and Code 8871, and NCCI's ABCs of Experience Rating; one state's published classification rule, which says it is based on NCCI Basic Manual Rule 1 (Classification Assignment, effective 6 February 2023) and Rule 2G (its interchange of labour rule), and that state's NCCI-reprinted classification list dated January 2026. Rule quotes and code numbers are examples from that text, not a national rule: confirm every code and rule in the manual for your policy's state and effective date.