In the complicated world of workers’ compensation insurance regulation, four states have very different laws than the other 46. If you’re launching a business in one of these states or plan to employ anyone residing in these states, you’ll have to get to know how monopolistic states operate.
What Makes North Dakota, Ohio, Washington, and Wyoming Different?
North Dakota, Ohio, Washington, and Wyoming differ from other states in that they have monopolistic state funds for workers’ compensation insurance. In these states, employers must purchase their workers’ comp policy from the state fund, meaning it has no competition from private insurance providers.
How Do Monopolistic Workers’ Comp State Funds Work?
The state compensation insurance fund for workers compensation illnesses and injuries functions similarly in the four monopolistic states. Monopolistic funds are entirely government-owned and operated, and all employers in the state pay into the fund.
Like other states, North Dakota, Ohio, Washington, and Wyoming have their own laws and policies regarding:
- Registration, licensing, and application processes
- Workers’ compensation requirement exceptions and exemptions
- Whether or not businesses can self-insure
- Industry classification codes
- Calculating experience modifiers and experience ratings
- Deductible options and programs
To research the legal requirements and policy logistics in each monopolistic state, refer to the following resources:
- The North Dakota Workforce Safety and Insurance administers workers’ comp coverage in North Dakota.
- In Ohio, the Ohio Bureau of Workers Compensation oversees the state fund.
- Washington’s State Department of Labor and Industries sells workers’ comp insurance and also oversees the state’s occupational safety program.
- The Workers Compensation Division within the Wyoming Department of Workforce Services handles all-things workers’ comp in the state of Wyoming.
Advantages of the Monopolistic System
For business owners in monopolistic states, one significant advantage of the system is the guarantee that you can obtain quality coverage at a fair rate, regardless of your industry risks and claims history. High-risk professions, like those in the construction industry, receive the same services and protections as businesses that would otherwise be easier to insure.
Furthermore, owning a business in a monopolistic state eliminates the guesswork of researching insurance providers, requesting quotes, and comparing rates.
Disadvantages of the Monopolistic System
A considerable disadvantage of monopolistic state funds is the lack of competition that drives businesses within open markets toward better service and competitive pricing. Some of the additional perks that business owners receive from their insurance providers, such as return-to-work program resources, won’t come with a state-fund policy.
Also, businesses that are relatively “easy” to insure because they face a low risk of injuries and occupational illnesses may end up paying more than they would pay a private insurer in a different state. This is a result of purchasing a policy from a fund that insures all businesses, even those on the opposite end of the workplace hazard spectrum.
Though purchasing a workers’ comp policy is relatively straightforward in monopolistic states, employers do need to consider a few additional factors to obtain full coverage for all injury and illness-related expenses.
In other states, workers’ compensation policies typically include employers liability coverage. However, in monopolistic states, no workers’ comp policies have this feature. Instead, employers in monopolistic states who want these protections typically add it as an endorsement to their commercial general liability (CGL) insurance policy. CGL policies also cover bodily injury liability, property damage liability, and advertising injury liability.
It’s also important to note that business owners in monopolistic states that employ workers from non-monopolistic states always have to purchase independent workers’ compensation policies to cover those workers.
Working with Monopolistic Workers’ Comp State Funds
The advantages and disadvantages to monopolistic state funds aside, business owners in North Dakota, Ohio, Washington, and Wyoming need to work with the state fund to obtain legally-required workers’ comp coverage.
While some business owners may wish they had more coverage options, operating within a monopolistic state surely simplifies the process of purchasing and maintaining workers’ comp coverage. For more information about how to secure coverage, head to your state’s workers’ comp administrator’s website.