What are monopolistic workers’ compensation states?
Most states allow employers to purchase workers’ compensation insurance from either private insurers or state-run funds. However, a few states operate differently.
States with monopolistic workers’ compensation practices require employers to buy coverage exclusively through a state-operated fund, meaning private insurers cannot provide workers’ compensation policies within those states.
This system helps ensure consistent coverage and pricing within each state, but it can also limit an employer's flexibility and choice. Understanding how these states operate helps businesses maintain compliance and manage risk across multiple locations.
The four states with monopolistic workers’ compensation funds
Only four U.S. states currently operate under a monopolistic system, providing the same core features of regulated premium rates, full claims administration, and workplace safety programs/incentives. Each has its own state agency responsible for administering workers’ compensation coverage:
Ohio: Employers must purchase coverage through the Ohio Bureau of Workers’ Compensation (BWC). Some businesses can self-insure if they meet certain requirements.
North Dakota: Coverage is provided exclusively by Workforce Safety & Insurance (WSI).
Washington: Employers obtain coverage from the Department of Labor & Industries (L&I). However, the state allows certain large employers to self-insure with approval.
Wyoming: Workers’ compensation coverage is issued through the Wyoming Department of Workforce Services.
In these states, private insurance carriers—including Sentry—cannot issue workers’ compensation policies. Employers need to comply with their respective state programs.
How insurance works in monopolistic states
While the structure may differ from traditional coverage, the goal remains the same: to help protect employees who experience work-related injuries or illnesses—as well as their employers.
However, unlike most private workers’ compensation policies, monopolistic state policies typically do not include employer’s liability coverage, which helps protect businesses from lawsuits related to workplace injuries.
To fill this gap, businesses often purchase stop gap coverage, an additional endorsement added to a general liability policy. This helps protect against potential legal costs that would not be covered by the state’s workers’ compensation fund.
Navigating workers’ compensation compliance across states
Operating in both monopolistic and non-monopolistic states can make managing your workers’ compensation insurance more complex. That’s why it’s valuable to work with an experienced provider who understands multi-state compliance.
At Sentry, we participate in various state workers’ compensation pools and funds, and we can help you:
Understand state-specific requirements
Identify when and how to purchase stop gap coverage
Coordinate workers’ compensation protection across multiple locations
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