Workers Compensation Insurance in Monopolistic States
Buying Insurance in Ohio, Wyoming, Washington, and North Dakota
Four states in the U.S. prohibit the sale of workers compensation insurance by private insurers. These states are referred to as the monopolistic states because they require employers to purchase workers compensation coverage from a government-operated insurance fund. They are Ohio, Wyoming, Washington, and North Dakota.
Nevada and West Virginia were monopolistic states in the past but switched to a competitive market system after their state fund experienced financial problems. Nevada opened its workers compensation market to private insurers in 1999. West Virginia followed in 2008.
Monopolistic Versus Competitive Funds
Many states operate workers compensation insurance funds but most of these are competitive enterprises that vie for business with private insurers. Some 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 only source of workers compensation insurance in the state. It has no competitors because private insurance is not permitted.
Classification and Rating
Each of the monopolistic states has developed its own classification and rating system. Ohio, Washington, and North Dakota use a system based on four-digit codes. These are not the same as the codes used by the NCCI. Wyoming classifies workers using the North American Industry Classification System (NAICS), which is based on six-digit codes.
Separate Policy Required
If a business employs workers in multiple states, one of which is a monopolistic state, the workers employed in the monopolistic state must be insured under a separate policy purchased from the state bureau. They cannot be insured in conjunction with workers employed in other states under a multi-state workers compensation policy.
A workers compensation policy obtained in a monopolistic state does not include employers liability coverage. In these states, employers liability is typically covered via an endorsement attached to a general liability policy. When it is included by an endorsement, employers liability insurance is often called stop-gap coverage.
Coverage in Ohio
In Ohio, workers compensation insurance is mandatory for any business that employs at least one worker. Employers must purchase this coverage from the Ohio Bureau of Workers Compensation (BWC). They can complete an application at the BWCs website or mail a hard copy to the Bureau. All must pay a nonrefundable application fee.
The BWC operates an experience rating program and calculates experience modifiers for eligible employers. It also offers a group experience rating program that allows employers in similar businesses to save money on workers compensation premiums. A group must be sponsored by a trade association or other employer group. The sponsoring organization that wants to sponsor a group must apply to the BTW for certification.
Ohio permits workers to self-insure their workers compensation obligations. To qualify as a self-insurer, an employer must employ at least 500 Ohio workers and meet other eligibility requirements.
Coverage in Wyoming
In Wyoming, workers compensation insurance must be purchased from the Workers Compensation Division of the Wyoming Department of Workforce Services (DWS). Businesses that employ any workers in Wyoming must register with the DWS before they begin operating or hire any workers.
Once an employer has registered, the DWS classifies workers using NAICS codes. Workers compensation insurance is required for some classifications and is optional for others. Base rates are posted on the DWS website. The DWS calculates experience modifiers for employers that are eligible for experience rating.
The DWS does not permit self-insurance. However, it does offer a deductible program for employers that meet its requirements. Deductibles range from $1,000 to $100,000.
Coverage in Washington
Businesses that employ any workers in the state of Washington are required to purchase workers compensation insurance from the Washington State Department of Labor and Industries (L&I). In addition to providing insurance, the L&I oversees Washington's occupational and safety program, which is approved by OSHA.
Before a business can purchase workers compensation insurance, it must have obtained a business license and opened a workers compensation account. The L&I reviews the employer's application and determines the appropriate classifications using its own classification system. 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 an employer has at least $25 million in assets and an effective accident-prevention program.
Coverage 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 hire 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. It posts rates on its website. The agency operates an experience rating program for employers that meet a specified premium threshold. Employers that aren't eligible for experience rating are subject to a small account debit/credit program.
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.
The WSI does not permit employers to self-insure their workers compensation obligations. However, it does offer a large deductible program for employers that meet its qualifications.