Differences between NAICS and SIC Codes

Understanding SIC and NAICS Codes

Even with a plethora of industry jargon you can come across in the business world, you never know when your knowledge may get tested. For anyone looking to buy insurance or work as an insurance professional, two terms that come up a lot but are quite mysterious are SIC and NAICS codes. These two concepts constantly work in the background but are still overt terms that drive day-to-day businesses.

SIC Codes

What are SIC Codes?
SIC, or Standard Industrial Certification Code, is a numerical code adopted by the U.S. government in 1937 to make it easier for American businesses to compare their economy with Canada more easily. SIC Codes organize industries by their business activities, making it more uniform and easier to compare statistical data.

What does a SIC Code do?
SIC codes add structure and clarity to an already vast and multifaceted economy. Apart from that, SIC codes can:

  • Allow federal or state agencies to track for government statistical purposes.
  • Classify markets for professional use or identify key competitors in both public and private markets.

  • Pinpoint businesses eligible for government contracts.
  • Create a straightforward way to collect, analyze and report economic metrics.
  • Successfully complete relevant forms and applications.


What are NAICS Codes?
NAICS, or The North American Industry Classification System, took over from the SIC in 1997, developed jointly by the U.S., Canada, and Mexico to make better statistical business comparisons between the three countries. NAICS codes are official codes used by the U.S. government and internationally.

How are NAICS and SIC Codes Used?
Both NAICS and SIC codes help you find information about industries in business databases and directories. You can use the codes to:

  • Identify the lines of business of a company
  • Identify competitors within the industry
  • Locate and compare industry ratios with your company’s ratios
  • Generate company listings within an industry

  • Find articles and current news about an industry.

NAICS vs SIC: What’s the Difference?
NAICS codes (6 digits) have all but replaced SIC (4 digits) codes. The former is more flexible and can expand to include additional major industry sectors. While some companies and agencies still use SIC codes, you can review the directory to determine which best describes your company’s primary business activities.

Other Industry Classification Systems

There are several other nation-based and organization-based systems. For instance,

  • The SEMI Industrial Classification System
  • GICS, the Global Industry Classification Standard
  • International Standard Industry Classification (ISIC) system

If you are an insurance agent, comprehending NAICS and SIC codes is crucial. As these codes classify businesses and industries based on their primary activities, insurance agents can effectively target specific markets. By understanding the nature of companies within these codes, insurance agents can tailor their marketing strategies to address the unique insurance needs of each industry.

Frequently Asked Questions

Can You Compare SIC Data with Current NAICS Data?
No. SIC codes don’t directly convert to NAICS codes. A company under a particular SIC code may now be under a different NAICS code.

Which Code is Better to Use?
It is important to have both the NAICS and SIC codes when you do business research since many resources might use only NAICS or only SIC codes.

How do I find NAICS and SIC codes?

You can use one of two ways to find SIC and NAICS codes:

  1. Search the official government SIC and NAICS manuals online.
  2. Locate a company profile for the company you are researching. Company profiles usually include its SIC and NAICS codes. Several companies operate under multiple industries and may have more than one code. A company’s primary SIC/NAICS codes are generally first in the listing.

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