State funds that are the only source of workers compensation insurance for employers in that state are called:

• A. Competitive funds
• B. Assigned risk plans
• C. Monopolistic state funds
• D. Voluntary markets

Answer: (C)

Monopolistic state funds describe a market where the state itself is the only source of workers’ compensation insurance for employers in that state. In this setup, private insurers aren’t allowed to issue new workers’ comp policies, so every employer must obtain coverage from the state fund. This arrangement ensures the state controls premiums, benefits, and administration of claims, and it often aims to guarantee universal coverage.

In contrast, states with competitive markets rely on private insurers that compete for business. When a high-risk employer can’t find coverage in the voluntary market, the state may run an assigned risk plan to place that employer with private carriers. Voluntary markets refer to the standard private-market insurers writing policies for employers.