Department of Labor issues security-deposit guidance for longshore workers' comp carriers

The US Department of Labor’s Office of Workers’ Compensation Programs (OWCP), through its Division of Longshore and Harbor Workers’ Compensation (DLHWC), published a proposed-rule notification of guidance concerning insurance-carrier security deposit requirements under the Longshore and Harbor Workers’ Compensation Act (LHWCA) and its extensions, on February 9, 2026 (document 2026-02537; 91 FR 5691; 20 CFR part 703).

The proposal would publish OWCP/DLHWC’s sub-regulatory guidance as a formal, standardized rubric for setting and adjusting an authorised carrier’s required security deposit – expressly tying the collateral requirement to specified factors, including tables that convert carrier and insured credit ratings into defined “discount tiers” and corresponding securitization percentages, plus stated adjustments for longevity, LHWCA exposure and payment history.

Within OWCP’s regulatory framework, DLHWC’s Branch of Financial Management Insurance and Assessment set initial and annual security deposit amounts considering factors identified in 20 CFR 703.204(b)(1)–(6). This includes the following:

1. The carrier’s financial strength as determined by private insurance rating organizations (with a table linking Fitch and S&P long-term issuer credit ratings and AM Best insurance credit ratings to maximum discounts from 100% securitization), the resulting securitization requirement, and a discount tier; OWCP notes that submitting only two ratings triggers an automatic reduction of one discount tier, submitting only one rating triggers an automatic reduction of two tiers, and where more than one rating is provided OWCP uses the lower rating, while also stating it will use the applicant’s long-term issuer credit rating (not a parent’s).
2. The financial strength of the carrier’s insureds in the Longshore industry, with a separate table of maximum adjustments and a requirement that 100% of insureds’ credit ratings be submitted (or, where unavailable, an explanation).
3. The extent to which state guaranty funds secure LHWCA obligations, which OWCP says is applied on a state-by-state basis and is not relevant to liabilities under the Defense Base Act and other extensions.
4. Longevity in writing LHWCA or other workers’ compensation coverage, with a table of adjustments by years.
5. The extent of the carrier’s exposure for LHWCA coverage, which OWCP says is limited to companies with 11 years or more writing policies under the LHWCA and its extensions and is reflected in a table tied to the percentage of total liabilities with LHWCA.
6. Payment history in satisfying LHWCA obligations, for which OWCP says an excellent payment history may qualify for a 5% to 10% discount and untimely performance may affect discounts.

OWCP also notes that if a carrier disagrees with the Branch’s decision, it must request a hearing in writing within 10 days under 20 CFR 703.204(d).