A number of states established special insurance funds to actually provide insurance. The state acts as the insurer and collects premiums or taxes from the public and offers insurance protection against specified hazards.
The state fund is usually empowered to write only workers' compensation insurance or workers' compensation and employer's liability insurance. In a few states, disability benefits insurance is also written only by a state agency.
Laws that provide that a given line of insurance can be acquired only through a state facility are called monopolistic. If the state facility operates in conjunction with private carriers, it is called competitive.