New York - Construction Classification Premium Adjustment Program Endorsement (WC 31 03 01)
1. What the form is
The WC 31 03 01 endorsement, titled "New York - Construction Classification Premium Adjustment Program Endorsement," is a crucial component of a Workers' Compensation and Employers Liability insurance policy for specific employers in New York. Its primary purpose is to formally incorporate the provisions of the New York Construction Classification Premium Adjustment Program (CPAP) into the insurance contract. This program is statutory and designed to provide premium credits to construction industry employers who pay their workers high hourly wages. The rationale behind CPAP is twofold: to incentivize construction employers to pay higher wages and to help those high-wage-paying employers remain competitive when bidding on projects. The endorsement outlines how this premium adjustment will be applied to the policy.
It's important to note that the CPAP program has undergone a significant overhaul, with redesigned program improvements applying to policies effective on and after October 1, 2025. While the core purpose remains, the mechanics of application and credit calculation have been updated. A related endorsement, WC 31 03 23, is now mentioned as needing to be attached to all CPAP eligible policies to provide advance notice of data requirements.
2. Classes of business it applies to
This endorsement specifically applies to employers within the construction industry in New York State. To be eligible for the CPAP and thus have this endorsement be relevant, an employer typically must:
- Be experience-rated.
- Have operations falling under one or more of the specific construction classification codes deemed eligible for the program by the New York Compensation Insurance Rating Board (NYCIRB). As of October 1, 2025, there are 80 such eligible construction classification codes. Examples could include classifications like "Carpentry," "Masonry," or "Electrical Wiring."
- Pay average hourly wages that exceed a certain threshold set by the NYCIRB for those specific classifications.
Real-world example: A unionized commercial electrical contractor in New York City that pays its electricians significantly above the average wage for that classification code would likely be a candidate for the CPAP and would see this endorsement (or its updated versions) on their workers' compensation policy.
3. Special considerations
- Program Redesign (Effective October 1, 2025): The CPAP has been substantially redesigned. Key changes include:
- Elimination of the need for employers to proactively submit a CPAP application. Instead, insurers are required to ask policyholders for CPAP payroll information during the final premium audit.
- Utilization of current wage information from the policy at issue, rather than historical data.
- Implementation of a wage credit table that individualizes credit determinations by class code, recognizing that wages vary across different construction occupations. This table leverages prevailing wage information from the NYS Department of Labor.
- Mandatory Attachment: For policies eligible for CPAP, an explanatory endorsement (previously WC 31 03 19, and now WC 31 03 23 for the redesigned program) must be attached to the policy. This endorsement informs the policyholder about the program and the data they will need to provide.
- Data Submission is Key: Policyholders are responsible for submitting all required payroll-related information to their insurer in a timely manner during the final premium audit process. Insurers are not required to apply a CPAP credit if the employer fails to submit the necessary information within a reasonable timeframe.
- NYCIRB Role: The insurer transmits the CPAP-required payroll information to the NYCIRB. The Rating Board then calculates the actual CPAP credit percentage and informs the insurer so it can be applied against the final premium.
- Exclusions: The program generally applies to construction classifications, but work involving one- or two-family residential housing may have different payroll reporting requirements (e.g., total payroll instead of limited payroll for credit determination under older rules).
- Purpose to Offset High Wage Impact: The program helps to level the playing field, as higher wages typically lead to higher workers' compensation premiums (since premium is often based on payroll). CPAP mitigates this for high-paying construction employers.
Real-world example: If a qualifying construction company undergoes its annual workers' compensation audit, the auditor, per the redesigned program, will request detailed payroll information, including hours worked and wages paid for each eligible construction class code. This data will then be sent to the NYCIRB to determine the credit. Failure to provide this detailed breakdown could mean the company forfeits a potentially significant premium credit.
4. Key information for agents and underwriters
- Identify Eligible Insureds: Proactively identify construction clients in New York who may be eligible for CPAP based on their classification codes and wage structures. This can be a significant value-added service.
- Quoting with Estimated Credit: Under the redesigned program (effective October 1, 2025), insurers will be able to include an estimated CPAP credit when quoting policies. This can make bids more competitive. However, it's crucial to communicate that the final credit is determined by the NYCIRB.
- Audit Process is Critical: Emphasize to insureds the importance of accurate and timely payroll record-keeping, broken down by classification code and including hours worked, as this information is now collected at final audit for credit determination.
- Understand Program Changes: Stay updated on the specifics of the redesigned CPAP, as the process and basis for credit calculation have changed significantly. The move to current wage data and class-specific credit tables is a major shift.
- No Automatic Credit: The credit is not automatic. The required data must be provided. Insurers are not obligated to grant the credit if the employer doesn't furnish the necessary information.
- Impact on Competitiveness: For construction companies, this credit can substantially reduce their workers' compensation costs, impacting their overall bid competitiveness on projects.
- Policy Documentation: Ensure the correct and current version of the CPAP explanatory endorsement (e.g., WC 31 03 23 for the redesigned program) is attached to all eligible policies.
The WC 31 03 01 endorsement, and the CPAP program it supports, are designed to address premium disparities arising from differing wage scales within the New York construction sector. Understanding its nuances, especially with the recent overhaul, is vital for effectively serving construction clients in the state.