Our Services     Our Qualifications        Our History         Our Blog           Our Online Workers Comp Guide

Consultants On Workers Compensation Premiums, Audits, Classification Codes, Experience Modifiers

Pennsylvania Workers' Compensation

In the Keystone State (well, Commonwealth, to be precise) there are some unique aspects to Workers' Compensation insurance that employers 
would do well to understand.  Here are some important aspects of the Workers' Comp system in Pennsylvania.  We've tried to answer some of the most common questions. First off, though is something we here at AIM have discovered that affects what contractors in Pennsylvania pay for their Workers Compensation insurance:

A 2012 study by the PCRB (Pennsylvania CompensationRating Bureau) found that 90% of eligible contractors were missing a significant premium credit on their Workers Compensation insurance.

Now, Advanced Insurance Management specializes in finding and fixing premium overcharges in Workers Compensation insurance.  We don't sell insurance, we just recover money back for employers by correcting mistakes on past policies. 

So this PCRB study tells us that there are many, many contractors in Pennsylvania who have been overcharged for Workers Comp insurance in recent years.

And because we are available to work on a contingent-fee basis, we can check if a company has been overcharged without it costing that company anything for our services.  We only earn a fee if we can successfully recover money.  No recovery, no charge.

To talk with us about this and to see if we can get money back for your company, call us at 800-288-9256.  Or email us.  There's no cost for us to check if your company has been overcharged because of this common error

Contact Us

Who has to get Workers Compensation coverage in Pennsylvania?

In Pennsylvania, any business that has workers, full or part-time, is required to meet their statutory Workers Compensation obligations by either getting an insurance policy, or by being approved as a self-insurer (only practical for large companies) or by getting coverage from the
State Workers' Insurance Fund (SWIF). 

In Pennsylvania, an employer may be excluded from the requirement to insure its workers’ compensation liability only if ALL workers employed by it fall into one or more of the following categories:
  • licensed real estate salespersons or associate real estate brokers affiliated with a licensed real estate broker or a licensed insurance agent affiliated with a licensed insurance agency, under a written agreement, remunerated on a commission-only basis and qualifying as independent contractors for State tax purposes or for Federal tax purposes under the Internal Revenue Code of 1986.
NOTE: unless ALL employees meet one or more of the above exclusions, you must insure your workers’ compensation liability even if the workers are working limited hours part-time or are family members such as your spouse or children.

Employers may request exemption from the provisions of the Workers’ Compensation Act for any employees who are members of a recognized religious sect and adhere to its established tenets or teachings which conscientiously oppose acceptance of public or private insurance benefits by filing a "Section 304.2 Application for Religious Exception of Specified Employees from the Provisions of the Pennsylvania Workers’ Compensation Act," concurrently with the appropriate number of properly executed forms LIBC-14B, "Employee’s Affidavit and Waiver of Workers’ Compensation Benefits and Statement of Religious Sect" with the Compliance Section, Bureau of Workers’ Compensation. If the Compliance Section grants exemption, the employer may omit insuring its workers’ compensation liability only with respect to the particular employees exempted for as long as the particular employee is a member of and adheres to the tenets of that religious sect and the sect continues to conscientiously oppose acceptance of public or private insurance benefits.

A non-profit corporation may request exclusion of any of its executive officers who serve voluntarily and without remuneration. A subchapter S for-profit corporation may request exclusion of any of its executive officers who have an ownership interest as defined by Tax Reform Code of 1971. A subchapter C for-profit corporation may request exclusion of its executive officers if they have at least a 5% interest in the corporation.
To request exclusion of permissible executive officers from the provisions of the Workers’ Compensation Act, complete and file an "Application for Executive Officer Exception," form LIBC-509, concurrently with the appropriate number of properly executed "Executive Officer’s Declarations," form LIBC-513. These forms must be filed with the employer’s insurance carrier if the employer has a policy covering its other employees. The forms must be filed with the Compliance Section, Bureau of Workers’ Compensation if the employer has no other employees.

What About Independent Contractors?

Pennsylvania doesn't require sole proprietors or partners to cover themselves for Workers Compensation.  (They are required to get coverage, though, as soon as they have any employees.)  But as in many other states, if another company hires a sole proprietor or partner who is operating their own business, the company that hires them may well end up being charged extra premium by their own insurance company, if that independent contractor is uninsured.

It's a bit of a Catch-22--the state says these sole proprietors and partners don't have to get Workers Comp insurance on themselves, but as soon as a third party hires them that third party can get charged extra premiums on their policy.  But nonetheless, that's how it works in Pennsylvania and many other states.

So if you hire such a sole proprietor or partnership, keep in mind that contractually you can now require that they get coverage.  Pennsylvania rules were recently changed to enable sole proprietors and partners to elect to cover themselves, even though the state doesn't require it.  And companies have the right to insist that any independent contractor they use be covered for Workers Compensation, to make sure they don't get his with a premium charge on their own policies.

Unlike some other states, Pennsylvania currently does not have a mechanism whereby such sole proprietors or partners can register and exempt their customers from Workers Comp premium charges.  So they only way to avoid those premium charges is to insist that any independent contractors have their own coverage. even if it is a sole proprietor or partnership.

How are the premiums calculated?

Workers Compensation premiums are calculated by assigning classifications to the business operations (according to a system devised by the Pennsylvania Compensation Rating Bureau, or PCRB). Each classification has a particular rate, which is applied to remuneration (the rate is per hundred dollars of remuneration). The policy starts out with estimated remuneration (usually referred to as payroll, but it can be more than that) and then, when the policy ends, actual remuneration is determined, and the policy premium is adjusted by an audit. 

Keep in mind, PCRB classifications are used only for operations within Pennsylvania.  If a company also has operations in other states, then the classification system used in those other states would be used for those exposures.  Most other states (but not all of them) use the classification system devised by the National Council on Compensation Insurance, or NCCI.  So a company's operations in Pennsylvania would be classified using the PCRB system, while operations elsewhere would be classified using the NCCI classification system.  Also keep in mind that a few states don't use the NCCI classification system, but instead operate their own rating bureaus with their own classification rules.

The PCRB classification system is quite distinct from the NCCI classification system.  PCRB uses three digit classification codes, while NCCI and other states use a four digit classification code.  There are fewer classifications in the PCRB system than in the NCCI system, also.  PCRB has about 350 separate classifications, while NCCI has more than 500 "National" classifications, and then another thousand or so "State Special" classifications that apply only in particular states within the NCCI jurisdiction.

Insurance companies are also allowed to create "subclassifications" within the PCRB classification system, essentially refining the PCRB system by coming up with their own specialized classifications for certain kinds of exposures.

Another unique classification feature is that temporary staffing companies are assigned unique classification codes for the staffing industry, rather than just taking the classification code that applies to their client companies (as is done in other states.)

Premium is further adjusted, for companies paying $10,000 or more a year in premium, by application of the Experience Modification Factor. This factor, calculated annually by PCRB, is based on prior loss and payroll data of the particular business.   And if a company operates both in Pennsylvania and in other states, there will be a separate Pennsylvania experience modifier calculated by PCRB, and then another modifier calculated by NCCI for non-Pennsylvania operations.  (A couple of other states also have stand-alone modifiers: California, Michigan, Delaware, and New Jersey).

Companies with less than $10,000 in Pennsylvania WC premium may qualify for a 5% Merit Rating, based on loss history.

In Pennsylvania, different insurance companies compete on price.  That is, the rate charged by different carriers for the same classification may well vary.  They do this by means of  a Loss Cost Multiplier (LCM) that is applied to the base rate for each classification code.  The base rate is calculated by PCRB.

And in Pennsylvania, unlike most other states, the premium portion of overtime pay is NOT excluded when computing premium charges.

Who regulates Workers Compensation in Pennsylvania?

Claims matters are handled by the  Pennsylvania Department of Labor & Industry. This body resolves disputes regarding proper claims settlements, and compensability of particular claims. 

But disputes regarding insurance coverage (other than claims) are handled by the Pennsylvania Department of Insurance.

Information about Workers' Compensation in other states is available through our state by state directory.

For more information about how Workers' Compensation insurance premiums are calculated, please consult our online Guide.


Advanced Insurance Management helps employers reduce Workers Compensation insurance premium audits, classifications and experience modifiers, double checking technical issues that directly affect the premium charges made by insurance companies.

       We find and recover overcharges in past & current Workers Compensation insurance premiums paid by employers.

                  Advanced Insurance Management BBB® Accredited Business SealBBB® Accredited A+ Rating




Shocked by your latest Workers Comp Premium Audit? We may be able to help.

We review Workers Comp insurance audit billings to find and then fix technical errors that make the premium charges higher than they really should be--fixing mistakes before you pay that inflated bill.


Experience Modification Factor increase shutting your company out of work? We help employers lower experience mods.

The new experience rating formula is hurting many employers, and a mod over 1.00 can shut you out of important projects. A.I.M. lowers mods for clients by finding and correcting hidden calculation errors.


Change in WC Classification threatening your business? We help employers successfully appeal classification code changes by insurers or NCCI.

A.I.M. has helped employers all over the United States fight mistaken classification changes initiated by insurers or by rating bureaus such as NCCI.


In litigation over Workers Compensation insurance premium charges? We provide expert witness services in legal cases involving Workers Compensation insurance premiums, audits, classifications, experience modifiers, and related technical issues.

State and federal courts across the U.S. have recognized A.I.M. personnel as qualified experts on these issues.


We also can recover overcharges from your past Workers Compensation policies.

And we help employers successfully dispute Workers Compensation premiums and audits made by insurance companies.

In short, we lower Workers Comp insurance costs for employers by finding and correcting underwriting and auditing errors in Workers Comp premium calculations and audits.

Contact Us

"I would like to thank you for the great work you did in investigating the problem with our experience modification rating. Your discovery of errors as well as insurance companies' failures to submit data to NCCI were critical to our company's ability to continue to do construction work on federal projects."--National Resource Management

We Don't Sell Insurance

Advanced Insurance Management LLC is not an insurance agency or brokerage. We're not looking to compete with or replace your current insurance agent.  That means we can assist you, as consultants, without making any change in who you buy your Workers Comp insurance from. And we can work together with your agent, where appropriate, as we are not affiliated with any insurance agency or insurance company. 



"Before we hired Advanced Insurance Management, we were facing almost $40,000 of workers compensation premiums for my company that supposedly had one employee.  I was facing the very real possibility of having to close my doors because of these bills.
Advanced Insurance Management was able to negate the premium that the insurance company was trying to apply. I would highly recommend Advanced Insurance Management to anyone that is involved in a dispute with their Workmans Compensation Insurance carrier.  They saved my business."--WTLS Services





"Your review of our past Workers' Compensation policies produced a refund of just over $23,000, a refund produced by your finding overcharges in our old policies that we had never realized had occurred." --Diamond Blast Corporation



Such errors and overcharges are far more common than many in the insurance industry like to admit. The complexities of rules governing proper classification, experience modification factors, payroll audits, and varying state regulations and statutes mean that many employers are overcharged without ever knowing it.



How We Can Help You


"Thanks to your persistence and effort, we received a refund of over $36,000 from our insurance company."-Polar Tool

you can also listen to an audio interview about our work.


Consultants on Workers Comp Classification Codes, Experience Modifiers, Payroll Audits, & More

We've been helping employers since 1987, making Advanced Insurance Management one of the oldest and most experienced firms in the field of premium recovery.


"Advanced Insurance Management has been a tremendous help to Allied Welding, Inc., and has saved us money and generated a significant refund on our Workers' Compensation by finding an error in our classifications. We value their expertise."--
Allied Welding
Advanced Insurance Management BBB® Accredited Business SealBBB® Accredited A+ Rating
  • Advanced Insurance Management LLC
  • 3230 South Harlem Avenue,  Suite 203
  • Riverside, IL 60546
  • contact us:phone: 800-288-9256
  • e-mail:aim@cutcomp.com