Final answer:
States that allow private insurers to offer workers' compensation insurance as an alternative to the state-run fund are referred to as Competitive State Funds. These allow for competition which may benefit employers with better rates and services.
Step-by-step explanation:
States that allow private insurers to offer workers' compensation coverage as an alternative to the state workers' compensation fund are called Competitive State Funds. These states enable employers to either purchase workman's compensation insurance through a state-run program or through private insurers that provide employment-based insurance options. Such competitive environments can lead to better rates and services as companies vie for business with the state fund. It's important for employers to be aware of their state's structure for workers' compensation to ensure compliance and to understand the options available for insuring their employees against workplace injuries.