Comparison
Assigned Risk vs. Voluntary Market Workers' Comp
The voluntary market is where private carriers compete to write a business's workers' comp at standard, merit-based pricing. The assigned risk plan, a residual market of last resort, provides coverage of last resort for employers who can't find a voluntary-market carrier willing to write them.
Most employers buy workers' comp in the voluntary market, where private carriers actively compete for the business based on price, service, and underwriting appetite. A business with a reasonable claims history in a standard industry usually has multiple voluntary-market carriers willing to quote it, and an independent agency can shop several of them at once.
Some employers, though, can't find a voluntary-market carrier willing to write them, whether because of a poor claims history, a hazardous class of business, being brand new with no track record, or having previously gone uninsured. Because workers' comp is mandatory in nearly every state, there needs to be a coverage option of last resort, and that's the assigned risk plan, sometimes called the residual market. An employer placed in assigned risk is assigned to a carrier that participates in the plan, and pricing is typically less favorable than what a similar business might get in the voluntary market.
The options
Voluntary Market
Private carriers competing directly for a business's workers' comp based on merit.
Pros
- Carriers compete on price and terms, which can benefit a good-risk business
- More flexibility in program design, billing options, and safety services
- A wide range of carriers to compare through an independent agency
- Rewards a good claims history with more competitive options over time
Cons
- Not every carrier will write every type of risk
- A poor claims history or hazardous class can limit voluntary-market options
- Pricing and appetite can shift as carriers adjust their own books of business
Best for
- Businesses with a reasonable claims history in a standard industry
- Employers who want to compare multiple competitive options
Assigned Risk Plan
The residual market of last resort that provides coverage when no voluntary-market carrier will write the business.
Pros
- Ensures a coverage option exists, since workers' comp is mandatory
- Available even for businesses with a difficult claims history or hazardous class
- A pathway back to the voluntary market once claims history improves
Cons
- Pricing is typically less favorable than comparable voluntary-market coverage
- Less flexibility in program design and billing options
- Meant to be a temporary solution, not a long-term default
Best for
- Employers who have been declined by voluntary-market carriers
- New or higher-hazard businesses without an established claims history
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Side by side
| Feature | Voluntary Market | Assigned Risk Plan |
|---|---|---|
| Who writes the policy | A carrier competing for the business directly | A carrier assigned through the residual-market plan |
| Pricing | Competitive, merit-based | Typically less favorable |
| Availability | Not assured for every risk | Always available as a last resort |
| Flexibility in program design | Generally more flexible | More standardized |
| Intended use | The default market for most employers | A backstop when the voluntary market declines the risk |
| Path forward | Ongoing, competitive renewals | Often re-shopped to the voluntary market as history improves |
The bottom line
Most employers never need to think about assigned risk because the voluntary market is willing to write their business, but it exists precisely so that workers' comp coverage is never truly unavailable to a business that's required to carry it. If a business has been declined in the voluntary market, being placed in assigned risk is not a permanent status; as claims history and operations improve, it's often possible to move back into the voluntary market and access more competitive pricing. An agency that shops multiple carriers is well positioned to try the voluntary market first and use assigned risk only as a backstop.
Frequently asked questions
Why would a business end up in the assigned risk plan?
Typically because no voluntary-market carrier was willing to write the business, often due to claims history, a hazardous class of business, or a lack of an established track record.
Is assigned risk coverage worse than voluntary-market coverage?
The underlying statutory benefits are generally the same, but assigned-risk pricing and program flexibility are typically less favorable than what a comparable voluntary-market policy offers.
Can I get out of the assigned risk plan?
Often yes, especially as claims history improves; many businesses eventually re-qualify for voluntary-market coverage.
Is assigned risk the same as a state fund?
No. A state fund is a specific insurer, while assigned risk is a residual-market mechanism that assigns coverage to a participating carrier when the voluntary market won't write the business.
Should I ask my agency to check the voluntary market first?
Yes. An independent agency will typically try to place a business in the voluntary market before considering assigned risk, since it's usually the more favorable option.
Last reviewed · Reviewed by Provident Financial Group licensed agents
Compare up to 10 carriers in minutes.
One application goes out to every carrier we can access for your class of business. You get a ranked comparison you can review and purchase online — with a licensed agent available whenever you want one.
Mon–Fri, 8:00am–6:00pm ET · Independent agency licensed in 23 states