What Is SIC Code? Everything You Need to Know
When it comes to insurance, SIC codes are used to define and classify businesses based on the products and services they provide. These codes serve as a valuable tool for insurance providers in assessing the risks associated with their clients.
Say an individual applies for commercial vehicle insurance. In that case, the insurance company may ask them to provide the SIC code for their business to determine if they belong to a high-risk industry. This code will provide the insurance company with information regarding the types of work their employees or drivers are likely to perform, along with the risks they are likely to face while on duty. Carriers can use this information to help determine the premiums.
SIC codes also aid insurers with several analytical processes like underwriting, marketing, exclusions, loss control, pricing, and other related activities.
Insurance companies can use SIC codes to identify potential customers and marketing endeavors. For example, if you want to target potential clients within a specific industry, you can use their SIC codes to quickly determine if they’re a good fit to target.
If an insurance company is looking to conduct a market analysis, it can use the SIC codes to compare your business to a similar business that falls under the same category. Since you’re using SIC codes you can rest assured that you’re comparing businesses under the same industry.
If you’re planning on starting an insurance agency, you’ll need your SIC code to file taxes, and to fill out loan applications and other documentation. You will also need the code if you want to apply for government contracts and loans.
Insurance business fall under the major group “64.” So all types of insurance businesses will start with these two digits. Insurance agents, brokers, information and educational insurance services, and related service businesses fall into SIC code “6411.”
SIC codes have been extended to up to eight digits for more specific classifications within the 6411 category.
Some of the top ways SIC codes are used in insurance are:
Assists in Analytical Processes
SIC codes aid insurers with several analytical processes like underwriting, marketing, exclusions, loss control, pricing, and other related activities.
Identify Potential Customers
Insurance companies can use SIC codes to identify potential customers and marketing endeavors. For example, if you want to target potential clients within a specific industry, you can use their SIC codes to quickly determine if they’re a good fit to target.
Assists in Market Analysis
If an insurance company is looking to conduct a market analysis, you can use the SIC codes to compare your business to a similar business that falls under the same category. Since you’re using SIC, codes you can rest assured that you’re comparing businesses under the same industry.
Assists in Government Regulatory Tasks
If you’re planning on starting an insurance agency, you’ll need your SIC code to file taxes, fill out loan applications, and other documentation. You will also need the code if you’re looking to apply for government contracts and loans.
Insurance business fall under the major group “64”. So all types of insurance businesses will start with these two digits. Insurance agents, brokers, information and educational insurance services, and related service businesses fall into SIC code “6411”.
Note: Insurance companies fall under the major group “63”.
SIC codes have been extended to up to eight digits for more specific classifications within the 6411 categories.
