What is Workers’ Compensation — and what does “monopolistic state” mean?
 |
| Workers compensation monopolistic states 2025 |
Every U.S. state requires some form of workers’ compensation (WC) insurance, which provides medical benefits and wage replacement to employees who get injured or ill because of their job. Congress.gov+1
In most U.S. states, employers can choose between private insurance companies or a state-run fund (if a fund exists) — or even self-insure if they meet criteria. advisorsmith.com+2Congress.gov+2
But a handful of states operate differently: in those states, the law requires employers to purchase workers’ compensation only from a state-run fund — private insurers are not allowed to offer WC coverage. Those states are called “monopolistic states.” sentry.com+2twfgcommercial.com+2
As of 2025, only four U.S. states remain true monopolistic workers’ compensation states. Progressive Commercial+2Actuary.org+2
Which States Are Monopolistic — and What That Means in Practice
The Four Monopolistic States (2025)
| State | WC Agency / Notes |
|---|---|
| Ohio (OH) | Covered exclusively by the Ohio Bureau of Workers' Compensation (BWC). Private insurers cannot offer WC. twfgcommercial.com+2Wikipedia+2 |
| North Dakota (ND) | Covered by the Workforce Safety & Insurance (WSI). Only state-run WC coverage allowed. twfgcommercial.com+1 |
| Washington (WA) | Covered by the Washington Department of Labor & Industries (L&I). Employers must use the state fund; private WC insurers are prohibited (though certain large employers can self-insure under strict conditions). sentry.com+2help.letsdeel.com+2 |
| Wyoming (WY) | Covered via the state-run fund administered by the Wyoming Department of Workforce Services (DWS). No private WC alternative. Simply Business+2Anderson Insurance Group+2 |
These monopolistic states require all employers to secure WC coverage through the state fund only — no private WC insurer can be used for mandatory coverage. Anderson Insurance Group+2twfgcommercial.com+2
Some of them allow self-insurance by large employers meeting specific financial thresholds. EZ.Insure+1
Pros and Cons of Monopolistic Workers’ Compensation Systems
✅ Advantages
-
Universal coverage and consistency: Since all employers must use the same state fund, coverage tends to be uniformly available — even for high-risk businesses that might struggle to get a private policy elsewhere. Simply Business+1
-
Simplicity in government administration: State agencies handle premium collection, claims adjudication, and benefit payments — which can standardize processes across industries. Robert Wilson & Associates+2sentry.com+2
-
Clear regulation: Obligations are spelled out in law — less complexity navigating different private insurance providers. twfgcommercial.com+1
⚠️ Limitations and Trade-offs
-
No competition — limited choice: Since private insurers are excluded, employers don’t get to comparison shop for price or service. This can affect cost-efficiency or customer service quality in some cases. twfgcommercial.com+2Anderson Insurance Group+2
-
Lack of employer liability coverage by default: In these monopolistic states, WC policies often do not include employer’s liability coverage (i.e. coverage against lawsuits from injured workers). Instead, employers need a separate “stop-gap” or general liability endorsement to get that protection. EZ.Insure+2greyling.com+2
-
Complexity for multi-state employers: Businesses operating across multiple states — especially if one or more is monopolistic — may need separate WC policies (or separate compliance paths) for those locations. Multi-state WC policies often don’t extend to monopolistic states. EZ.Insure+2Progressive Commercial+2
Why So Few States Are Monopolistic — And How That Changed Over Time
Historically, a larger number of U.S. states had monopolistic or near-monopolistic WC systems. However, many have shifted toward either competitive state funds (that allow private insurers to compete) or fully private insurance markets. fraser.stlouisfed.org+2Actuary.org+2
As of 2025, only the four states listed above maintain a strict monopoly for WC — according to multiple industry sources. help.letsdeel.com+2Progressive Commercial+2
This change over decades reflects shifts in policy, regulation, and the insurance market — often driven by pressure for more flexibility, competition, and cost control.
What Monopolistic States Mean for Employers, Employees — and Outsourced/Remote Work
-
For Employers:
-
Must register with the state WC agency and purchase WC directly from them (unless self-insuring). help.letsdeel.com+1
-
Need to remember that employer’s liability coverage is typically not included — so they may need an additional liability policy endorsement. EZ.Insure+1
-
If operating across states (including monopolistic ones), they’ll need separate compliance and coverage strategies for each state. EZ.Insure+1
-
-
For Employees:
-
Workers are covered under a state-mandated WC program, providing medical care and wage replacement in case of work-related injury or illness. sentry.com+1
-
Claims are processed by a state agency, which might yield more consistency. sentry.com+1
-
-
For Remote / Outsourced / Multi-State Employers:
-
If you have staff in a monopolistic state (even part-time or remote), you may trigger WC obligations under that state — necessitating registration with the state fund.
-
Standard multi-state WC policies or private insurer policies may not cover a monopolistic-state employee. EZ.Insure+2greyling.com+2
-
Companies that use remote workers or contractors across different states should be particularly careful — compliance requirements differ widely across jurisdictions.
The State of Affairs in 2025 — What’s Stable, What’s Watching
-
The four monopolistic states (Ohio, North Dakota, Washington, Wyoming) remain unchanged as of 2025. twfgcommercial.com+2help.letsdeel.com+2
-
The monopolistic model remains relatively rare — most states rely on private insurers or “competitive state funds.” advisorsmith.com+2Congress.gov+2
-
The system continues to reflect the trade-offs between regulatory control and universal coverage (state fund), vs market competition and flexibility (private insurers).
-
For employers and businesses — especially those with operations across multiple states — understanding which states are monopolistic is crucial to ensuring compliance and adequate coverage.
Why This Matters Globally (and for International Employers)
Even if you are based outside the U.S., the monopolistic-state model highlights a broader global tension in workers’ compensation systems:
-
Should WC be a public/state-controlled service — prioritizing universal coverage and standardization?
-
Or a private, market-driven service — prioritizing competition, flexibility, and customizability?
For multinational employers, or firms hiring remote staff in different jurisdictions, understanding the WC regulation regime (monopolistic vs private) becomes critical in risk assessment, compliance, and global workforce management.
Conclusion — Monopolistic States: A Minority with Big Implications
Though only a small number of U.S. states maintain a monopolistic workers’ compensation system as of 2025, their existence has outsized importance. For any employer — domestic or international — operating or hiring in those states, it’s vital to recognize: