Division of Longshore and Harbor Workers' Compensation Guidance for Insurance Carrier Security Deposit Requirements
Published Date: 2/9/2026
Proposed Rule
Summary
Starting February 9, 2026, insurance companies that cover Longshore and Harbor workers will follow clearer rules on how much money they must set aside as a security deposit. This new guidance helps these companies plan better by linking deposit amounts to their financial health and performance, making sure injured workers get paid even if a company hits trouble. It’s a win-win for companies and workers, bringing fairness and predictability to the process.
Analyzed Economic Effects
5 provisions identified: 3 benefits, 1 costs, 1 mixed.
Guarantees benefits if carrier defaults
If you are an injured Longshore or Harbor worker, this guidance says security deposits exist to pay compensation and medical benefits when an insurance carrier defaults or becomes insolvent. The guidance restates that these deposits guarantee benefit payments when obligations are not covered by a State guaranty fund.
Deposits tied to carrier credit ratings
Starting February 9, 2026, OWCP will base how much collateral insurers must post on their Long-term Issuer Credit Rating (LT ICR). Table 1 sets a tiered schedule — for example, an AAA rating yields a 66.67% discount (resulting in 33.33% required securitization), AA and AA+ yield a 50% discount (50% securitization), and many lower ratings (BB+ and below) result in 0% discount and 100% securitization.
No deposit for top-rated or fully-guaranteed carriers
Under Sec. 703.204, a carrier that receives the highest rating from the three designated rating services in both the current and immediately preceding year will not be required to post a security deposit. Also, a carrier whose liabilities are fully covered by a State guaranty fund may avoid posting a deposit under Sec. 703.204(c)(2).
Deposit range for other carriers
For carriers that write more than an insignificant amount of LHWCA insurance and do not qualify for the exceptions above, the Branch may require a security deposit between 33 1/3 percent and 100 percent of obligations not secured by a State guaranty fund (see Sec. 703.204(c)(3)).
Multiple factors can raise or lower deposits
OWCP will adjust required securitization up or down based on additional factors: (1) the financial strength of the carrier's insureds (factor 2), which requires submission of 100% of insureds' credit ratings or explanations; (2) state guaranty fund coverage applied state-by-state (factor 3, not applicable to Defense Base Act and other extensions); (3) carrier longevity, with numeric adjustments (for example, >30 years gives +10% to the discount, 0-5 years gives -100%); (4) the carrier's share of LHWCA liabilities (Table 4 shows discounts from 20% down to 0% depending on exposure); and (5) payment history, where on-time payment can yield a 5–10% discount and poor payment history can reduce discounts up to -100% (Table 5).
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Key Dates
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