Workers Compensation Insurance State Fund

Most states require employers to obtain workers' compensation insurance coverage that provides their employees with medical benefits and compensation for lost wages due to injury or illness, occupation disease, or death arising while on the job.  Generally, work comp insurance coverage can be purchased from a voluntary market insurance carrier.

In some instances employers are unable to find a voluntary market workers' compensation carrier that will provide them with coverage.  Some common reason for this are caused by poor prior loss experience, dangerous nature of the risk, prior bankruptcy or poor financial status of the employer. 

Since work comp is mandatory, every state must make work comp insurance available to all employers required to purchase it.  This coverage option is referred to as the residual market.  Also known as the State Fund, Assigned Risk Plan  or a Pool Policy.  There are several ways in which a particular state may set up one of these residual markets.  Some sates establish their own state fund or even a competitive state fund which write both pool policies and voluntary market policies.  Other states establish a joint underwriting association (JUA).  However, most states establish a Workers' Compensation Insurance Plan (WCIP, or Assigned Risk Plan which are managed by NCCI. 

Each WCIP is the vehicle through which eligible employers unable to find workers' compensation coverage in the voluntary market can still purchase workers' compensation insurance.

Insurance coverage through the State Fund often coast 15% - 40% more than it would through the standard market.  Therefore these programs should always be your last choice option.  Even when a state funds are reasonable, they are often more difficult to deal with and unable to provide multi-sate comp coverage if needed.  While The Insurance Shop does work with the various State Funds and Residual Markets in most states, our goal is always to help relocate our insureds' out of these markets each year at renewal.

If you are with the State Fund via a pool policy and you want to get out, it may take some work.  Often it simply comes down to controlling your losses and claims.

Employers should always strive to prevent any injuries from occurring on the front end, but if injuries do occur, employers need to have a caring, responsive management system in place to help your employees recover and return to work ASAP. Employers should also communicate with employees frequently throughout the recovery process and provide a Return to Work Program when possible.

The following state statutory pools are managed by independent bureaus or organizations and not by NCCI:

• Indiana Assigned Risk Reinsurance Pool.
• Massachusetts Workers Compensation Assigned Risk Pool.
• Michigan Workers Compensation Placement Facility.
• Mississippi Workers Compensation Assigned Risk Pool.
• Wisconsin Rating Bureau.

In general, an employer is eligible for the state fund program when they have:

• Received the required number of voluntary insurer declinations.
• No outstanding offers of voluntary coverage.
• No outstanding insurance premium obligations, non-compliance issues with audits or reasonable safety recommendations .
• Not made material misrepresentations when applying for coverage.

Click Here to get state specific information regarding the State Fund and Residual Market for Work Comp

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