Workers Compensation Insurance in Monopolistic States

Buying Insurance in Ohio, Wyoming, Washington, and North Dakota

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Ohio, Wyoming, Washington, and North Dakota prohibit the sale of workers compensation insurance by private insurers. They are collectively called the monopolistic states because they require employers to purchase workers compensation coverage from a government-operated insurance fund.

Key Takeaways

  • The monopolistic states are Wyoming, Washington, Ohio, and North Dakota.
  • All four monopolistic states bar the sale of workers compensation insurance by private insurers. In these states, employers must buy insurance from a state-run insurance fund.
  • While workers compensation policies sold in monopolistic states don’t include employers liability insurance, employers can add the coverage (called stop gap insurance) to their general liability policy.

Monopolistic vs. Competitive Funds

Workers compensation insurance funds exist in many states but most are competitive enterprises that vie for business with private insurers. Some funds serve multiple purposes. For instance, the State Compensation Insurance Fund (of California) and the New York State Insurance Fund are competitive funds that also administer their state's assigned risk plan.

Unlike a competitive fund, a monopolistic state fund is the sole source of workers compensation insurance in the state. It has no competitors because private insurance is not permitted.


Nevada and West Virginia were monopolistic states in the past but have switched to a competitive market system. Nevada opened its workers compensation market to private insurers in 1999. West Virginia followed in 2008.

Separate Policy Required

Suppose a business employs workers in multiple states, one of which is a monopolistic state. Can all of the workers be covered under one policy? The answer is no. The workers employed in the monopolistic state must be insured under a separate policy purchased from the state bureau. They cannot be insured under a multi-state workers compensation policy.

Stop Gap Coverage

In monopolistic states, employers liability coverage is not included in workers compensation policies. Instead, it is covered via an endorsement attached to a general liability policy. When included in a liability policy, employers liability insurance is often called stop-gap coverage.

Workers Compensation in Ohio

In Ohio, any business with one or more employees must purchase workers compensation insurance from the Ohio Bureau of Workers Compensation (BWC). Employers can apply for a policy by completing an electronic application at the BWCs website or mailing a hard copy to the Bureau.

The BWC determines the rates charged to employers for workers compensation insurance. It classifies employers using the NCCI classification system. All employers that meet certain qualifications are entered into the state's experience rating plan. The BWC calculates each employer's experience modifier.

The BWC offers discount plans such as group experience rating, retrospective rating, and a deductible plan. These plans encourage employers to focus on safety, efficiency, cost control, and return-to-work.

Ohio permits employers to self-insure their workers compensation obligations if they meet certain eligibility requirements. For instance, employers must be financially stable and have at least two years' experience with the state fund.

Workers Compensation in Wyoming

Businesses that employ workers in Wyoming must purchase workers compensation insurance from the Workers Compensation Division of the Wyoming Department of Workforce Services (DWS). Businesses must register with the DWS before buying a policy.

Wyoming is unique in that it uses the North American Industry Classification System (NAICS) as a workers comp classification system. The DWS assigns each employer a six-digit NAICS code.  

The DWS lists base rates on its website. The agency calculates experience modifiers for all employers eligible for experience rating. While it does not permit self-insurance, the DWS does offer a deductible program for employers that meet its requirements. Deductibles range from $1,000 to $100,000.

Workers Compensation in Washington

Businesses that employ any workers in the state of Washington must purchase workers compensation insurance from the Washington State Department of Labor and Industries (L&I). Besides selling insurance, the L&I oversees Washington's OSHA-approved occupational and safety program.

All new businesses that operate in Washington must obtain a business license from the L&I and create a workers compensation account. The L&I reviews the employer's application and determines the appropriate classifications. Washington utilizes its own classification system based on four-digit codes. Rates are posted on the L&I's website. If an employer is subject to experience rating, L&I calculates the applicable experience modifier.

Washington does not offer a workers compensation deductible program. It does permit self-insurance if employers meet the requirements described on the L&I’s website.

Workers Compensation in North Dakota

North Dakota Workforce Safety and Insurance (WSI) is the provider and administrator of workers compensation insurance in North Dakota. Businesses must purchase insurance if they employ any individuals to work in the state or have employees working at a business located there. To obtain a policy, an employer must complete an application and submit it to the Employer Services Division of WSI. Applications are available at the WSI website. 

The WSI classifies workers using North Dakota's classification system, which is based on four-digit codes. Classifications and rates are posted on the WSI's website. Employers are subject to experience rating if they meet a certain premium threshold. Employers ineligible for experience rating are enrolled in the state's small account debit/credit program. The WSI does not permit self-insurance but it  does offer a large deductible plan.

The WSI offers a return-to-work program to help injured workers get back to work as quickly as possible. The program includes medical case management, vocational case management, and assistance to injured workers who are seeking reemployment.

Frequently Asked Questions (FAQs)

What are the four monopolistic states?

The four monopolistic states are Ohio, Wyoming, Washington, and North Dakota. They are called monopolistic states because they bar the sale of workers compensation insurance by private insurers. In these states, employers must buy workers comp insurance from an insurance fund operated by the state. Nevada and West Virginia were monopolistic states in the past but now have a competitive market system.

What is a monopolistic state fund?

A monopolistic state fund is a state-run organization established to provide workers compensation insurance to employers in that state. Because it’s the only source of workers compensation insurance in the state in which it operates, a monopolistic state fund has no competitors. It differs from a competitive workers compensation fund, which competes with private insurers for business.

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  1. International Risk Management Institute. "Assigned Risk Plans."

  2. The Hartford. "What Is Stop Gap?"

  3. The Hartford. "Ohio Workers Compensation."

  4. Ohio Bureau of Workers Compensation. "NCCI Classifications."

  5. Wyoming Dept. of Workforce Services. "Workers Compensation."

  6. Wyoming Dept. of Workforce Services. "Workers Compensation, Employer Services."

  7. Wyoming Dept. of Workforce Services. "Workers Compensation, Deductible Program."

  8. Washington Dept. of L&I. "Classifications for Washington Workers Compensation Insurance."

  9. North Dakota Workforce Safety and Insurance. "Employers."

  10. North Dakota Workforce Safety and Insurance. "Return to Work."

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