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Workers’ Compensation Insurance In Monopolistic States: A State-Run Approach

Workers’ Compensation Insurance In Monopolistic States
Table of Contents

Workers’ compensation insurance coverage in monopolistic states stands out from its counterpart in that there are no private insurers and mandatory purchases from state-run funds are compulsory for employers.

This article investigates the nuances of workers’ compensation insurance in states with monopolistic approaches, specifically Wyoming, Washington, Ohio, and North Dakota.

By detailing state-specific programs, coverage requirements, and requirements, this article seeks to provide a complete picture of this state-led approach.

Examining its advantages and limitations will shed light on what challenges employers and employees in these states will likely experience.

By offering an in-depth examination of workers’ compensation insurance in monopolistic states, this article seeks to inform and educate its audience, enabling them to navigate this unique insurance landscape effectively.

Key Takeaways

  • In states governed by monopolistic systems, private insurers cannot offer workers’ compensation insurance to employers; instead, they must purchase coverage through state-run funds.
  • Uncompetitive workers compensation insurance funds exist only in monopolistic states like Wyoming, Washington, Ohio, and North Dakota.
  • State-run funds in each monopolistic state establish rates, classify employers, and offer discount plans or self-insurance options that meet specific eligibility criteria.
  • Employers in states where monopolistic states dominate can add employers’ liability coverage by endorsing their general liability policy.

Benefits and Limitations

State-run approaches to workers’ compensation insurance in states governed by monopolistic regimes offer many advantages for employers, as private insurers cannot sell workers’ comp coverage there. This ensures all employers in those states have access to coverage regardless of size or financial capacity and that every injured employee receives adequate compensation payments from all sources.

Additionally, state-run plans help employers maintain stable premiums as the rates and classifications are set by an official fund managed by the state rather than private insurers competing among themselves, which could cause fluctuating premiums.

One major limitation of this approach is employers’ limited choices and flexibility when selecting an insurance provider. Employers must purchase from state-run funds without being allowed to shop around for the most cost-effective coverage and rates, which may impede their ability to find tailored solutions tailored to their needs.

State-Specific Programs

Monopolistic states typically offer tailored coverage and support to businesses employing workers – likened to an orchestra that responds perfectly to each state’s distinct requirements. These state-specific programs offer tailored protection and assistance that meet each business’s unique needs.


Ohio employers with one or more employees must purchase workers’ compensation insurance through the Ohio Bureau of Workers Compensation (BWC), which establishes rates and classify employers according to the NCCI classification system. They offer discount plans as well as self-insuring under specific eligibility requirements.


Employers in Wyoming that employ workers must purchase workers’ compensation insurance through the Workers Compensation Division of the Wyoming Department of Workforce Services (DWS). Wyoming utilizes North American Industry Classification System (NAICS) classification for its classification system and offers a deductible program without permitting self-insurance.


Washington businesses must purchase workers’ compensation insurance through the Washington State Department of Labor and Industries (LI). The LI reviews applications, determines classifications, and calculates experience modifiers for employers subject to experience rating. They do not offer a deductible program but allow self-insurance.

North Dakota

North Dakota businesses must obtain workers’ compensation insurance from North Dakota Workforce Safety and Insurance (WSI), which uses North Dakota’s classification system for classifying workers and provides large deductible plans and return-to-work programs.

State-specific programs offer businesses essential coverage and assistance, ensuring the well-being of both employers and employees alike.

Coverage and Requirements

In monopolistic states, employers are mandated to purchase workers’ compensation coverage through state-run funds to comply with workers’ compensation requirements and eliminate private insurers as providers for this insurance product.

Here are three aspects of coverage and requirements in these states:

  1. Reporting Requirements: Employers in states governed by monopoly must follow specific protocols when reporting workers’ compensation claims, such as promptly reporting workplace injuries or illnesses to the state-run fund. Failing to do so could incur penalties or fines.
  2. Cost Analysis: State-run funds in monopolistic states provide rates and classifications for employers based on factors like business nature, employee count, and claims history to calculate premiums. Employers should conduct a cost analysis to understand better the financial implications associated with workers’ comp insurance and ensure compliance with state regulations.
  3. Separate Policies: Employers employing workers in states governed by monopolistic regulation must secure separate workers’ compensation policies to meet state coverage requirements for these employees rather than purchasing multi-state policies that do not adequately cover them.

Employers can effectively navigate state-run workers’ compensation insurance in monopolistic states by understanding reporting requirements and performing cost analyses.

Here is a frequently Asked Question list regarding reporting requirements.

What are the reasons behind having states with monopolistic workers’ compensation insurance policies?

Monopolies in workers compensation insurance exist to establish an approach that provides all employers in those states access to coverage without competition, with consistent rates and classifications across the board. Other advantages include centralized control, simplified processes, and the opportunity for additional programs or discounts to be offered by these policies.

Do employers in states where state-run funds provide coverage exceed what can be purchased privately?

Employers in states dominated by monopolistic funds may purchase additional coverage beyond what is provided through state funds. However, potential drawbacks include limited options and lack of competition which can lead to higher costs for employers.

How do monopolistic states determine rates and classifications for employers purchasing workers compensation insurance?

Monopolies state-run organizations such as the Ohio Bureau of Workers Compensation and Washington State Department of Labor and Industries determine rates and classifications for employers purchasing workers compensation insurance through state-run organizations like NCCI or NAICS classification systems to classify employers and calculate rates.

Can employers in monopolistic states choose to self-insure their worker’s compensation coverage?

Employers in monopolistic states, such as Ohio, Wyoming, Washington, and North Dakota, can self-insure their worker’s compensation coverage. This allows them to assume the financial risk and provides potential advantages and disadvantages.

Do monopolistic states provide incentives or discount plans to encourage employers to buy workers’ compensation insurance?

Monopolistic states offer discount plans and programs to incentivize employers to purchase workers’ compensation insurance. They also provide additional coverage options, determine rates and classifications, and allow self-insurance under specific eligibility requirements. This is part of their state-run approach.


State-run worker’s compensation insurance in monopolistic states offers both advantages and drawbacks.

Employers in these states must purchase insurance from state-run funds; however, this arrangement restricts their options by not permitting coverage from private insurers.

Each state varies in terms of programs and requirements for car loans, such as discount plans, eligibility rules for self-insuring policies, deductible programs, and classification systems.

Employers can enhance their coverage by adding employers liability coverage through an endorsement on their general liability policy.

Overall, this state-run approach serves as a foundation for protecting workers and employers, creating an enabling framework to promote safety and well-being for everyone involved.

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