American Manufacturing Company cannot afford to self-insure its workers compensation insurance. This is an example of

• A. An assigned risk plan
• B. A state competitive fund
• C. A self-insured group
• D. A monopolistic state fund

Answer: (D)

In workers’ compensation, some states operate a monopolistic state fund, meaning the state is the sole provider of coverage in that state. If a company cannot afford to self-insure and cannot obtain private market coverage, the only option is to buy coverage from this state fund, which is the insurer of last resort in that state. That’s why this scenario fits a monopolistic state fund: the company relies on the state-run insurer because self-insurance isn’t feasible and there’s no competing private market supplying coverage. The other options describe different funding arrangements—an assigned risk plan is a fallback within the private market for high-risk employers, a state competitive fund is a state-run fund that competes with private insurers, and a self-insured group is when employers pool resources to self-insure—none of which align with the monopolistic setup where the state is the only insurer.