(September 2009)
Monopolistic workers compensation states do not permit open competition between the state fund and private insurance companies. In most cases, only a single fund is available in each state and all insurance must be placed in it. Private companies may be permitted to provide workers compensation coverage on a limited basis but this is the exception to the rule and is usually only done under unique or special circumstances.
At the present time the four monopolistic states are North Dakota, Ohio, Washington and Wyoming. The brief recap that follows indicates some of the important highlights of these individual state funds.
North Dakota has its own dedicated rating organization that handles and administers its workers compensation insurance arrangement. It is an exclusive employer-financed, no-fault insurance system covering workplace injuries, illnesses and deaths and is the sole provider and administrator of the workers compensation system in the state. With limited exception, North Dakota law requires all employers to secure workers compensation insurance to cover their full-time, part-time, seasonal or occasional employees before they are hired.
Out of state employers with workers in North Dakota must secure workers compensation insurance on them. If their workers compensation coverage extends into North Dakota, proof of such coverage is required unless the employer's home state is one having a reciprocal agreement with the North Dakota workers compensation facility. If the employers workers compensation insurance extends into North Dakota, and any one employee earns 25% or more of his or her gross annual wage in the state, or 25% or more of the employer's total payroll is for employees working in North Dakota, coverage is required and the employer must report all payroll generated in the state.
Workers compensation coverage is mandatory for all employments except:
Ohio has two separate and distinct operations in its state organization to handle and administer its workers compensation insurance arrangement:
Employers that must provide workers compensation coverage may select from one of two available options. The first option is to simply purchase workers compensation insurance from the state fund. The second is to self-insure within the state rules and guidelines for doing so.
All private and public
employers that have at least one employee must purchase workers compensation
coverage. This requirement also applies to employers of domestic employees
whose earnings exceed a stated minimum amount or threshold.
Washington State handles and administers its workers compensation arrangement through the Department of Labor and Industries. All employers, both public and private, are required to provide coverage on all employees with a few exceptions. Coverage is not mandatory for corporate officers, partners, sole proprietors and domestic workers. However, an exception applies to domestic workers in cases where an insured employs two or more of them on a full-time basis and those workers must be covered. An employer may include a number of other occupations on a voluntary basis including, but not limited to, musicians, entertainers, insurance brokers, law enforcement officers and firefighters, unless subject to any previously existing Acts.
Washington law does provide for self-insurance to a limited extent but it is subject to a number of narrow and strict requirements and involves a substantial financial commitment by the insured employer.
Wyoming has a Workers Compensation Division that handles and administers the state insurance arrangement. Workers compensation coverage is mandatory in the state program for hazardous operations as defined, as well as for other specific and defined operations. Employers engaged in operations other than these have the option of not providing workers compensation coverage at all or of purchasing coverage from private insurance companies.
While workers compensation coverage is available through private insurance companies for some employers, the state establishes the rates for each industry or business classification.
Note: West Virginia was a monopolistic state until January 1, 2006. As of that date, a mutual insurance company provided all workers compensation coverage in the state. In July 2008 other insurance companies entered the state and now compete with this company for workers compensation business.
When an insured employer has operations or conducts business in states not indicated as a covered or listed location on the Workers Compensation and Employers Liability Insurance Policy Information Page, coverage is normally effected by listing those “other” states on the Information Page in Item 3. C. This item indicates coverage for other states but coverage cannot be provided this way if one of the other states is a monopolistic state.
Each monopolistic state has its own method for combining coverage with the coverage of non-monopolistic states. The method used by a given state must be thoroughly reviewed in order to determine the procedure and the best way method to handle such cases.