A competitive state fund is a state-owned and operated fund that provides workers compensation insurance to employers who operate within that state. Some states operate a state workers compensation insurance fund in direct competition with private insurance carriers. Employers in these states can choose to purchase their workers compensation coverage from the state fund or a private insurer. State funds are typically formed with the help of the state legislature who establishes the fund and provides initial start up capital and brings in start up management. In the life cycle of a competitive state fund you're bound to find that sometime in the future that fund will attempt to go out on it's own. It's happened before and will happen again. Keeping in mind the original reason for establishing one of these funds is usually to help gain some control over the increasing costs of workers comp insurance coverage for employers. In other words, they are formed to help provide relief to the states employers for some type of crisis, usually in the form of high costs.
The key here is competition. In contrast, there are some states who are monopolistic, meaning workers comp insurance can only be secured in their state from the state fund. See our special section on monopolistic states and refer to our state specific page section for more information for where your business is located.
At the time this page was produced there were 20 competitive state funds in operation. Here's a list of those states and the name of their funds:
Arizona - State Compensation Fund
California - State Compensation Insurance Fund
Colorado - Pinnacol Assurance
Hawaii - Hawaii Employers Mutual Insurance Company