Which term refers to states that require coverage to be obtained through a state-run monopoly, rather than private insurers?

Which term refers to states that require coverage to be obtained through a state-run monopoly, rather than private insurers?

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

Answer: (B)

Monopolistic states are those where workers’ compensation coverage must be obtained through a state-run fund, with private insurers not allowed to write standard WC policies. This creates a government-backed monopoly for coverage. In these states, the state fund is the sole supplier of workers’ compensation insurance, and employers typically obtain coverage there rather than from private carriers. Some employers may still self-insure if the state permits, but the defining feature is the exclusive role of the state fund. The other options describe different concepts: a state fund is the actual fund used in these states, but the term asked for is the type of state; the assigned risk or residual market is a mechanism used in competitive markets to place high-risk employers who can’t get coverage in the voluntary market; self-insurance is a separate route that some employers may pursue under specific rules.

Monopolistic states are those where workers’ compensation coverage must be obtained through a state-run fund, with private insurers not allowed to write standard WC policies. This creates a government-backed monopoly for coverage. In these states, the state fund is the sole supplier of workers’ compensation insurance, and employers typically obtain coverage there rather than from private carriers. Some employers may still self-insure if the state permits, but the defining feature is the exclusive role of the state fund. The other options describe different concepts: a state fund is the actual fund used in these states, but the term asked for is the type of state; the assigned risk or residual market is a mechanism used in competitive markets to place high-risk employers who can’t get coverage in the voluntary market; self-insurance is a separate route that some employers may pursue under specific rules.