Employers who purchase workers compensation insurance from a private insurer are obtaining insurance from

• A. A monopolistic fund.
• B. An assigned risk plan
• C. The voluntary market.
• D. A competitive fund.

Answer: (C)

The key idea is the distinction between the voluntary market and the residual market for workers’ compensation. When an employer buys coverage from a private insurer, that coverage comes from the voluntary market, where private carriers compete to sell policies to employers that meet underwriting standards. The assigned risk plan is the residual market—the state-run option for employers who can’t obtain coverage in the voluntary market, typically at higher premiums or with restricted terms. Monopolistic funds are state-backed programs that may dominate a market in some states, and a “competitive fund” isn’t the standard term for this scenario. So, private insurers selling workers’ comp coverage means the employer is in the voluntary market.