Many states have created ____ to make workers compensation insurance available to employers that cannot obtain this insurance in the voluntary market, usually because of poor loss experience.

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

Answer: (B)

Assigned risk plans are a residual market mechanism that ensures workers compensation coverage for employers who can’t obtain it in the voluntary market because of poor loss experience. When standard insurers won’t issue a policy, these plans step in by pooling high-risk exposure and assigning it to an insurer from the plan’s roster. The employer still gets coverage, but at a premium built from standard rates plus surcharges or assessments that fund the pool. This system keeps the market open for all employers, preventing gaps in coverage while signaling that those with worse loss experience pay more for the risk they bring.

Other options don’t fit this purpose as neatly. Self-insured groups involve employers funding their own claims rather than purchasing through the market, which is a different arrangement. A monopolistic state fund is a state-run option that may be the sole writer in that state, not specifically the mechanism designed to place hard-to-place risks into coverage. A competitive fund isn’t the established term for this approach.