State Fund Workers' Comp

State fund insurance programs help guarantee that all businesses are able to obtain workers' comp insurance.

State Fund Workers Comp.

When do I need a state fund insurance for workers' compensation?

It depends on the state. State insurance funds, in most states, cost more than coverage from a private insurance company. Only employers with multiple claims and high risk class codes will need to buy state fund insurance. When a business is located in a monopolistic state, workers' comp insurance must be purchased from that state fund. Businesses outside of the four monopolistic state (ND, OH, WA, WY) should prefer to avoid the fund unless its a competitive state insurance fund. They can sometimes compete with private insurance companies.
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State Fund Insurance Varies by State

What is a Workers Compensation State Fund?

State fund insurance coverage protects business owners the same way as a private workers comp policy. Often times, a state fund policy is actually insured by a private carrier, but at a much higher rate. State fund insurance policies pay claims for employee injuries and illness. A true state fund is a quasi-government organization put in place to make sure all employers have access to workers compensation insurance. Otherwise, some employers would be unable to get coverage.

State fund insurance is often synonymous with Assigned Risk Plan, Assigned Risk Pools, Residual Market and carrier of last resort. Collectively, all of these terms refer to process used by each state to ensure employers have a mechanism to purchase coverage at a controlled rate per class code.

State fund workers' comp can be confusing for employers because it has numerous meanings and terminology. In California, SCIF is referred to as The Fund. In New York, NYSIF may be referred to as The State Fund. In mosts states, people refer to their states Assigned Risk Program as state fund insurance.

Monopolistic State Fund insurance

Some states do not allow any private insurance companies to provide workers' comp insurance in the state. These states require all employers to buy their coverage from a single source provider managed by the state. In certain instances, very large employers may be allowed to self-insure their workers comp insurance.

The four remaining monopolistic states are North Dakota, Ohio, Washington, and Wyoming.

Competitive State Fund Insurance

A competitive state fund refers to those states operating a state fund carrier that both serves as the residual market and also competes with private insurance companies for more desirable work comp polices. Some competitive state funds do a better job of competing with private companies than others.

NCCI State Fund Insurance- Assigned Risk

The majority of states operate without a designated state fund managed by the state. Instead, these states utilize NCCI to administer the Assigned Risk Pool program through private insurance companies. This program is commonly referred to as Assigned Risk Plans.

The assigned risk pool refers to all the private carriers in the state that participate in the placement of state fund insurance. NCCI quotes these policies with licensed insurance agents. Once the policy is bound, or secured by payment, NCCI will assign the policy to one of the private insurance companies participating in the pool. Most states require the private carriers to participate. Assigned risk rates are much more expensive.

State Fund Workers' Comp May be the Only Option
Most states require employers to obtain workers compensation insurance coverage. Businesses must carry this coverage on order to provide their employees with medical benefits and compensation for lost wages due to injury or illness, occupation disease, or death arising while on the job. Typically, workers' comp insurance coverage should be purchased from a voluntary market insurance carrier.

In some instances, employers are unable to find a voluntary market insurance company willing to offer a quote for their workers' comp insurance. Some common reasons for this include:

  1. Poor loss experience related to either the frequency of claims or the amount paid for claims versus the premium paid (also known as a high EMR Rating or Experience Modification Factor)
  2. The dangerous nature of the risk inherent in some industries workers' comp codes
  3. No prior coverage or management experience by the business owner
  4. Prior bankruptcies or poor financial status of the business, and
  5. Prior cancellations due to nonpayment of workers' compensation premiums

When Do I Need Assigned Risk Insurance?

A business becomes eligible for an assigned risk policy when they are unable to find voluntary market insurance from a licensed agent or agency. The following conditions should be met first:

  1. The business has received 3 or more declinations from private insurance companies
  2. There are no pending offers for voluntary coverage
  3. There are no outstanding insurance premiums due to a prior carrier
  4. There are no non-compliance issues with a prior workers' comp audit
  5. The business has not made material misrepresentations when applying for coverage
What is the Purpose of a State Insurance Fund?

Since workers compensation is legally required throughout the United States, each state must provide access to finding coverage. An assigned risk plan or a competitive state fund ensures that businesses are able to buy work comp coverage in the state. State fund programs are also referred to as the Residual Markets. They are more commonly known as State Insurance Funds, Assigned Risk Plans, or Workers' Compensation Pool policies.

There are several ways in which a particular state may set up one of these residual markets. Some states establish their own State Fund to write coverage. Other states may create competitive State Funds which write both pool policies and voluntary market policies. States such as Florida establish a Joint Underwriting Association (JUA) to provide coverage. However, most NCCI states establish Workers' Compensation Insurance Plans (WCIP, or Assigned Risk Plans), which are administered through NCCI (National Council on Compensation Insurance).

Each WCIP State Fund provides a mechanism through which eligible employers who are unable to find workers compensation coverage in the voluntary market must use to purchase workers' compensation insurance. Some states require proof of declination from one or more private carriers in order to access the State Pool.

Insurance coverage through the State Fund often costs 15% - 40% more than it would through a standard voluntary market. Therefore, State Fund insurance programs should usually be the last resort for a business. Even when state insurance fund rates are reasonable, these funds are often more difficult to deal with. They often can't provide out-of-state workers comp coverage. Payment options may also be limited with state fund workers comp.

How Do I Get Coverage from the State Insurance Fund?

Businesses need to apply for state fund insurance with a agent licensed to sell Property and Casualty in the state. We are a state fund insurance agency. We work with state fund insurance providers such as SCIF, NYSIF, NCCI and other and residual markets throughout the United States.

Our Workers Comp Specialists help employers understand how to lower their workers comp rates and find voluntary market coverage. We prefer to place coverage with private insurance companies. Sometimes the state insurance fund is the only choice for a business. When that happens, we will help you make the appropriate changes to get out of the fund at a future point in time.

How to Avoid the State Workers Compensation Fund?

When a business buys coverage from a state insurance fund or an assigned risk pool,there is a good chance they could save money with a private insurance company. Sometimes its simply a matter of comparing your current rates with a national agency that works with a diverse group of carriers. Avoiding assigned risk insurance typically comes down to controlling your workers' comp losses and minimizing claims over a consistent period of time. We have partners and safety services designed to help with these issues.

Employers should always work to prevent injuries from occurring with good training practices and safety initiatives. When injuries do occur, employers need to have a quick, caring, and responsive claims management program in place to help employees recover and return to work as quickly as possible. Employers should also communicate with employees frequently throughout the recovery process and provide a Return to Work Program when possible.

State Insurance Funds Managed by State Bureaus
  • Indiana Assigned Risk Reinsurance Pool
  • Massachusetts Workers Compensation Assigned Risk Pool
  • Michigan Workers Compensation Placement Facility
  • Mississippi Workers Compensation Assigned Risk Pool
  • New York State Insurance Fund
  • Wisconsin Rating Bureau
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A List of Competitive State Insurance Funds

The states below represent competitive state insurance funds and state government sponsored carriers that have the ability to compete with private insurance companies. All other states utilize NCCI for the placement of state fund insurance policies under each state Assigned Risk Pool. The four remaining monopolist states ()ND, OH, WA, WY) do not allow private workers compensation carriers to quote workers comp insurance in their state.

State Competitive State Funds
Arizona CopperPoint Mutual Insurance Company
California State Compensation Insurance Fund
Colorado Pinnacol Assurance
Hawaii Hawaii Employers’ Mutual Insurance Co. Inc.
Idaho Idaho State Insurance Fund
Kentucky Kentucky Employers Mutual Insurance
Louisiana Louisiana Workers’ Compensation Corporation
Maine Maine Employers Mutual Insurance Company
Maryland Chesapeake Employers’ Insurance Company
Minnesota SFM Mutual Insurance Company
Missouri (Mutual) Missouri Employers Mutual Insurance (non-profit)
Montana Montana State Fund
New Mexico New Mexico Mutual
New York New York State Insurance Fund- NYSIF
North Dakota Workforce Safety and Insurance
Ohio Ohio Bureau of Workers Compensation
Oklahoma CompSource Mutual
Oregon State Accident Insurance Fund - SAIF
Pennsylvania Pennsylvania State Workers Insurance Fund
Rhode island Beacon Mutual Insurance Company
South Carolina South Carolina State Accident Fund
Texas Texas Mutual Insurance Company
Utah Utah Workers" Compensation Fund
Washington Washington Department of Labor and Industries
Wyoming Wyoming Division of Workers Safety & Compensation
State Fund Workers' Comp Can be More Expensive

The State Insurance Fund is often 15% - 40% higher than a policy written through a private insurance company.

Our workers' comp specialists are experienced in dealing with the NCCI residual markets and other state fund insurance programs throughout the United States. If your business needs an assigned risk pool policy for your business, contact us today.

When we quote your workers compensation insurance coverage, we work hard to keep your business out of the state insurance fund. We currently offer several programs through our private insurance companies designed to help business owners avoid paying higher work comp rates for state fund insurance. Our agency is appointed with most insurance companies specializing in high risk industries and businesses who have had a few large claims affecting their experience modification rating.

If we can't find workers comp quotes with our partners, we will provide a quote from the appropriate state insurance fund. Then we will advise you on what steps your business can take to avoid a state fund policy at your annual renewal.

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States Where We Offer State Fund Insurance Quotes

Our agency work with most state insurance funds and assigned risk pools. We are licensed in all states. We've already helped thousands of employers buy state fund coverage when a voluntary market policy is not available. We are appointed with NCCI and can provide your business with an assigned risk insurance quote in the following states:

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State Fund Insurance Terms

Residual Market

A residual market refers to an insurance mechanism put in place to make sure businesses always have an available option to buy a particular insurance products. When a business can't find insurance coverage from a voluntary market insurance carrier, they will have the option to pay a higher fixed cost for the coverage in the residual market. The residual market is also known as the coverage source of last resort.

Assigned Risk

An Assigned Risk Pool and Assigned Risk Plan are the same thing. These plans requires private insurance carriers operating in the state to provide guaranteed coverage for workers compensation insurance under state law.

How Much is
Workers Comp?

Employers in different industries pay different rates for workers comp insurance because the risk of injuries associated with the industry vary. A low risk business, such as a small business office, might only pay a few hundred dollars a year. A higher risk business, such a small contractor, might pay several thousand dollars a year. The general rate per hundred dollars of payroll for clerical is less than $0.40 cents, while the rate per hundred for a construction worker can be well of $10.00 per hundred in mosts states.

Rates in each state are different for the same classes of business, or class codes. Additionally, a business may ultimately receive an Experience Modifier that will affect the rates of all insurance company quotes. This EMR Rating is based on claims and the amount of premium paid.

Workers compensation insurance is much more expensive in the residual market than it is in the private market. Rates are higher because because statistical data has indicated that carriers can expect a higher frequency if injuries and a great cost for each claim due to severity of the expected injuries.

Learn About Experience Mod's
Visit NCCI for more resources and information about workers' compensation class codes. Visit United States Department of Labor for more information about government agencies managing workers compensation insurance rates.

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