Many states have authorized the formation of ____ to assist employers in their search for more economical ways to insure their workers compensation obligations. Most of these groups retain a TPA to administer benefits, although occasionally one of the employers in the group will provide these services for all of the members.

• A. Assigned Risk Plans
• B. Monopolistic State Fund
• C. Self-Insured Groups
• D. Competitive Fund

Answer: (C)

The concept being tested is group self-insurance as an alternative risk financing method for workers’ compensation. Self-insured groups let multiple employers pool their resources to self-fund their workers’ compensation obligations rather than purchasing traditional insurance. A third-party administrator is commonly used to handle claims administration because managing claims and benefits is a specialized function, even though one member of the group might provide these services for all. This setup is different from assigned risk plans, which exist to place workers who can’t obtain coverage in the voluntary market, and from monopolistic or competitive state funds, which are government-backed programs rather than voluntary industry groups.