The Monopolistic States for Workers’ Comp Insurance

Monopolistic States
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As a result of their significance, a number of states own and administer their own workers’ compensation insurance programs. These states are known as “monopolistic workers’ compensation states” due to the fact that they only offer this type of program. For more insights, this article provides additional information on the monopolistic states of Wyoming, Washington, Ohio, and North Dakota regarding their workers’ compensation insurance funds.


Workers’ compensation insurance is so important that some states own and run the programs that everyone needs. These states have what is known as “monopolistic workers’ compensation states” programs. Workers’ compensation can help pay for medical bills, rehab, lost wages, and even long-term disability or death payments if an employee gets hurt on the job.

Although employers’ liability insurance is not part of workers’ compensation insurance in monopolistic states, this is something that employers can look for and pay for to help protect themselves from the costs of cases filed by workers who get hurt on the job. The law in monopolistic states says that private companies like Next can’t sell workers’ compensation insurance. 

What is a Monopolistic State?

A “monopolistic state” is one that has laws that say the state’s workers’ compensation program is the only one that can provide workers’ compensation benefits. In monopolistic states, there is no open market for workers’ compensation insurance. Also, private companies are not allowed to give or allow people to get this insurance. However, some businesses can self-insure in monopolistic states, but there are strict rules about who can be a self-insuring boss.

Workers Compensation Monopolistic States

Workers’ compensation insurance plans in monopolistic states aren’t that different from those in other states. One example is that workers’ compensation rates are closely controlled by the state, even in places where businesses can buy insurance from many different companies. Employers and employees going through a workers’ compensation claim in Ohio and other monopolistic states must talk directly to an Ohio government administrative arm. No matter what kind of business they are in, every state has workers’ compensation insurance. To protect your most important asset, which is your employees.

Workers Compensation Monopolistic States: Coverage and Requirements

To meet workers’ compensation regulations, firms in monopolistic states must purchase insurance through state-run funds. This is to eliminate private insurers as providers of this insurance product. These three elements illustrate what these states demand and how they cover things:

#1: Requirements for Reporting 

Employers in monopoly states must follow certain steps when reporting workers’ compensation claims, such as telling the state-run fund right away about workers’ injuries or illnesses. Also, punishments or fines could be given for failing to do so.

#2. A look at the Costs 

In monopolistic states, state-run funds give companies rates and classifications based on things like the type of business, the number of employees, and past claims to figure out premiums. So, before getting workers’ compensation insurance, employers should do a cost study to better understand how much it will cost and to make sure they are following all state rules.

# 3. Different Policies

Businesses that hire people in states with monopolistic regulation must get them their own workers’ compensation policies to meet the coverage standards of those states. They shouldn’t buy multi-state policies that don’t cover them well. Additionally, understanding the rules for filing and doing cost analyses are two things that employers can do to get the most out of state-run workers’ compensation insurance in monopolistic states.

Workers Compensation Monopolistic States: Examples Of Monopolistic States

Read more about workers’ compensation laws for these states in the sections below:

#1. Workers Compensation in Ohio

The Ohio Bureau of Workers Compensation (BWC) is where businesses with one or more employees must buy workers’ compensation insurance.  This is where employers can request a policy by either filling out an online application on the BWC’s website or sending a paper copy to the Bureau.

The BWC then decides how much companies have to pay for workers’ compensation insurance. Using the NCCI classification system, it rates companies. The state’s experience rating plan includes all companies that meet certain requirements. The Bureau of Workers’ Compensation figures out the experience modifier for each company.

Also, discount plans, like group experience rating, hindsight rating, and a deductible plan, are available from the BWC. These plans support companies focusing on safety and efficiency, keeping costs low, and getting people back to work.

In addition to that, under certain conditions, Ohio businesses can self-insure their workers’ compensation costs. Therefore,  it’s necessary for employers to have a stable income and at least two years of practice with the state fund, for example.

#2. Workers Compensation in Wyoming

Wyoming employers must get workers’ compensation insurance from the Workers Compensation Division of the Wyoming Department of Workforce Services (DWS). Prior to purchasing insurance, a business needs to register with the DWS.

Wyoming is the only state that uses the North American Industry Classification System (NAICS) as its workers’ compensation system. Each employer gets a six-digit NAICS number from the DWS.  

There are base rates on the DWS’s webpage. For all employers who are qualified for experience ratings, the agency figures out those employers’ experience modifiers. Although self-insurance is not allowed, the DWS does have a deductible program for businesses that meet its standards. 

#3. Workers Compensation in Washington

Washington State requires all businesses with workers in the state to buy workers’ compensation insurance from the Labor and Industries (L&I) department. The L&I provides insurance and also manages Washington’s OSHA-approved safety and health program at work.

The L&I provides business licenses and sets up workers’ compensation accounts for all new businesses in Washington. Upon reviewing the employer’s application, L&I decides which groups are correct. For its own classification system, Washington uses four-digit numbers. The L&I’s website has rates listed. When a company is rated based on experience, L&I figures out the experience modifier that applies.

Also, Washington does not have a taxpayer-funded program for workers’ compensation.  if employers meet the standards listed on the L&I website, they are allowed to insure themselves.

#4. Workers Compensation in North Dakota

North Dakota Workforce Safety and Insurance (WSI) is in charge of providing and managing North Dakota’s workers’ compensation insurance. Companies need to buy insurance if they have people working in the state or at a company located there. Employers must fill out an application and send it to the Employer Services Division of WSI in order to get coverage. 

WSI’s website has rates and classifications listed there. Employers must apply for experience ratings if their premiums reach a certain level. 

In addition, the WSI has a program to help injured workers get back to work as soon as possible. Aside from helping hurt workers find new jobs, the program also handles medical cases and vocational cases.

Workers Compensation Monopolistic States: Factors To Consider

Pay close attention to the rules and laws about getting workers’ compensation in a monopolistic state if your business is located there, as they may be very different from those in a non-monopolistic state. This is what your business should keep an eye out for:

#1: Monopolistic state funds may not follow national standards for how to classify workers’ jobs. Wyoming, for instance, uses the North American Industry Classification System (NAICS). while most states do not use the National Council on Compensation Insurance (NCCI) program. A difference in how workers are classified could mean that people with the same job but a different classification method have to pay more for their insurance.

#2. In general, companies that do business in more than one state can get single workers’ compensation insurance that covers all of those states. Nevertheless, if your business is in a monopolistic state, you will need to get a different policy from that state’s Workers’ Compensation State Fund.

#3: The workers’ compensation policy of a monopolistic state does not cover employers’ liability insurance. This saves employers if an injured worker sues them for more than what workers’ compensation covers. For extra protection, you can get stop-gap coverage, which is usually an add-on to commercial general liability insurance.

Monopolistic State Funds

If you live in a certain state or territory and need insurance, a monopolistic state fund is the kind of fund that the government owns and runs. No private companies can compete for the business, and employers must buy insurance from the state fund.

This means that when a company in a certain state needs workers’ compensation insurance, that state can set up a monopolistic state fund and run it itself. In the state where it works, a monopolistic state fund has no competitors because it is the only place to get workers’ compensation insurance. A competitive workers’ compensation fund, on the other hand, faces off against private insurance for work.

In other words, if an employee gets hurt or sick on the job, this insurance will cover them and their family. The policies for workers’ benefits do not cover employers’ liability in monopolistic states, though. However, an endorsement that changes the policy is added to general liability insurance so that employers’ liability coverage can be added.

Monopolistic State Funds: Types

Assigned risk pools and assigned risk plans are other names for state funds. Authorities from the state run these funds, which help businesses get the required insurance coverage they can’t get any other way. The other choice is to get insurance through a state fund if you think that’s better for you.  For those who were wondering how the state funds pay for the claims, you should know that they do so by using the fees their insureds pay and the money they get from investments in that state.

Some state workers’ compensation funds are different from others, even though they all do the same thing. They are mostly divided into two groups: competitive state funds and monopolistic state funds, which we already talked about.

#1. Competitive State Funds

Businesses that want to get quotes, see what coverages are available from different sources, and find the best one for their needs should look into competitive state funds. Either a private insurance company or a state agency can give you a contract. 

Sometimes, when private insurers refuse to cover someone because they think it is too dangerous, states use state funds as a backup plan to make sure everyone can get workers’ compensation. Colorado, Utah, Texas, Arizona, and California are just a few of the states with strong worker’s compensation funds. But, in order to find the best deal for your business while still following state law, you should look into the market standards in your state.

Monopolistic State Funds: Pros & Cons

The best thing about both monopolistic and competitive funds is that they make sure all employers in a state have a steady source of workers’ compensation insurance, even those who work in jobs that are hard to cover. But there are a few disadvantages to monopolistic funds that are worth noting:

  • It’s not possible to get quotes from more than one insurance company in a state, so you can find the best policy and price for your business.
  • Some state offices might need help giving consistent customer service.
  • Workers’ compensation class codes might not meet national workers’ compensation class code (NCCI) norms.
  • There is no way to cover your workers who work in other states, so you’ll have to get insurance for them from a company outside of your own state.
  • Workers’ compensation from a monopolistic fund does not cover employers’ liability, but private insurance might be able to add this as a stopgap.

Is Indiana a monopolistic state? 

It is not

What states have stop-gap coverage? 

There are North Dakota, Ohio, Washington, and Wyoming.

What are three examples of monopolistic?

Restaurants, hair salons, household items, and clothing are examples of industries with monopolistic competition.

Is Florida an NCCI state?

Florida is also an NCCI state.

Does Texas require workers’ compensation?

Texas doesn’t require most private employers to have workers’ compensation


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