What is a Monopolistic State? .....special consumer information about the remaining four -
Monopolistic States have special legislation that requires Workers Compensation Coverage be provided exclusively by that State's Designated Workers Compensation program. Insurance through private insurance companies is not allowed. There is no open market within the monopolistic states. You will find that some of these
States will allow limited self-insurance however upon further inspection the requirements to qualify are so restrictive that only
few very large well funded employers could possibly qualify. There are four remaining Monopolistic States. Prior to July 1, 2008 there were five Monopolistic States.
On July 1, 2008 West Virginia moved from being included as a Monopolistic State to a state governed by the rules and regulations of NCCI. This was a very bold move on the part of West Virginia. It was a move that began several years ago in the planning stages. The transition began with the West Virginia State Legislature understanding and buying into the benefits of making the
move to a competitive workers compensation market within their state. Three years ago West Virginia's plan was put in place and the privatization process was phased in. 147 insurance companies filed rates to provide workers compensation insurance. A private mutual insurance company was created in 2005 and once conversion of the state fund was complete on July 1, 2008 the conversion to an open market system was complete allowing West Virginia employers to purchase workers compensation insurance from whatever admitted carrier they wished.
Nevada, another converted monopolistic state, went through a very similar change several years ago, the Nevada Legislature enacted legislation to begin the workers compensation privatization process in 1999.
Where to Find and How to Buy Workers Compensation in these special States:
The whole idea in these states is that workers comp insurance coverage can be only purchased through the state. Through state organizations usually known as a state fund. In a monopolistic state there is no open competition and you cannot buy workers comp through a private insurance company. Private insurance companies cannot sell insurance for a monopolistic state. Here's some things that will help you out.
Each state has a different set of information you'll be required provide in order to apply for coverage. Each state also has its own method of securing workers compensation coverage. These links will take you to a separate page where we provide you with a short list of the information you will need to gather and complete in order to make an application to the state for coverage.
Please remember, we do not sell insurance! We only provide helpful information to those visiting our site. On these information pages you will also find direct links to the individual monopolistic states webpage so you can contact the state authorities and apply for monopolistic states workers comp insurance. Be sure to contact each state for more information about their individual workers compensation systems!
Unique Workers Compensation Problems for Employers Found in Monopolistic States:
Workers compensation issues in Monopolistic States can be at best a challenge. We've provided you a list below of some of these special issues.
Private insurance is not allowed.
Workers Compensation is handled by a state or state sponsored agency.
Some of the state agencies are also responsible for handling their own disputes.
There can be unique customer service issues.
Because the Monopolistic States march to a different drummer there's no standardization of the employee work classifications.
Problems arise when an employer from a Monopolistic State performs work in other states. Special consideration must be given to proper coverage.
Both in-state and multi-state experience modification factors are handled differently. There is no standardization of this process.
Lack of employers liability coverage for employers within the Monopolistic States. Employers liability coverage must be acquired separately.
Employers from other states who perform work within the Monopolistic States must be careful to handle their workers compensation coverage correctly while working in the Monopolistic State. Most times they will have to secure a separate workers compensation policy for that state.
There are many more....
Problems these States are Facing:
The Monopolistic States Workers Compensation State operated funds face some serious current and future issues. Some of these issues may be a precursor of the failure of these funds. We've outlined below some of these challenges being faced by the Monopolistic States.
The lack of competition.
No need for profit. If the fund is deficient there is always the State to bail it out!
Poor management, fraud and lack of customer service.
Inability to choose their own clients. These funds must take all who apply.
And solvency is always an issue.
Some final thoughts....the future of monopolistic states:
Most of the states that were once monopolistic have failed and have switched to a fully open market system. As with the current situation in West Virginia, these states will usually convert their monopolistic system to a private carrier and then, at a later date, to an open market system. Once the open market system is in place the once monopolized state fund has to learn to compete with private insurance carriers either to their success or failure.
We believe that eventually all Monopolistic States will convert to open market systems. At a minimum, the Monopolistic States remain in flux and for now we all get to wade through their special rules and regulations to solve workers compensation problems!