Which term describes a system where a state operates a fund to provide workers' compensation coverage?

Which term describes a system where a state operates a fund to provide workers' compensation coverage?

• A. State fund
• B. Monopolistic States
• C. Assigned risk/residual market
• D. Self-insurance

Answer: (A)

State fund describes a system in which the state itself runs a fund to provide workers' compensation coverage to employers. This is a public insurer model: premiums go into the state fund, and benefits are paid from that fund. It can operate alongside private carriers in competitive states or be the sole provider in monopolistic states. This differs from self-insurance, where an employer pays benefits directly from its own resources, and from the assigned risk/residual market, which places high‑risk employers with private insurers funded by assessments across the insurance market.

State fund describes a system in which the state itself runs a fund to provide workers' compensation coverage to employers. This is a public insurer model: premiums go into the state fund, and benefits are paid from that fund. It can operate alongside private carriers in competitive states or be the sole provider in monopolistic states. This differs from self-insurance, where an employer pays benefits directly from its own resources, and from the assigned risk/residual market, which places high‑risk employers with private insurers funded by assessments across the insurance market.