Some employers might prove financial security in compliance with workers compensation laws through a monopolistic state fund, which

• A. Usually replaces assigned risk plans for employers who cannot obtain insurance in the voluntary market.
• B. Provides the only workers compensation insurance available in a given state.
• C. Is a state fund that is the only other option for coverage besides the voluntary market.
• D. Prohibits employers from using self-insurance to comply with workers compensation laws.

Answer: (B)

A monopolistic state fund means the state operates the only workers’ compensation insurer in that state, and private carriers do not compete in this line. Because of this setup, employers obtain coverage exclusively from the state fund, making it the sole source of workers’ compensation insurance available there. That’s why the statement describing the fund as providing the only workers’ compensation insurance in the state is the best fit.

In states with a voluntary market, employers can choose from private insurers, and an assigned risk plan provides coverage only for those who can’t obtain it in the voluntary market. But in a monopolistic state fund, private market options aren’t available, so the state fund is the exclusive option for coverage.