The U.S. Department of Labor has published a notice providing enhanced, transparent guidance on calculating the amount of securitization required by insurers writing policies under the Longshore and Harbor Workers’ Compensation Act. The action affects companies and insurers in vital industries, including shipbuilding, resource extraction, and defense.
The new guidance establishes a structured approach for determining security requirements for insurance carriers approved to write policies under the act. According to the department, the approach aims to lower the cost of doing business for industries considered essential to America’s economic and military strength while continuing to prioritize injured workers.
The guidance outlines several factors used to calculate required securitization. These factors include a company’s financial health, its experience writing LHWCA policies, and how quickly it pays accepted claims for injured workers. By identifying and publishing these criteria, the department states that it will improve transparency and increase industry confidence regarding potential liabilities and how to improve outcomes.
Secretary of Labor Lori Chavez-DeRemer said the guidance supports both worker protection and business fairness.
“As we restore America’s maritime and energy dominance, the Department of Labor continues to put American workers’ safety and health first,” Chavez-DeRemer said. “These guidelines will protect workers while creating a fairer environment for businesses that do vital work for our country.”
The Longshore and Harbor Workers’ Compensation Act, administered by the department’s Office of Workers’ Compensation Programs, requires private-sector employers to provide workers’ compensation coverage for employees in covered maritime and related positions. Insurance companies approved by OWCP to write policies under the act and its extensions must provide appropriate security to the department for their liabilities.
Although the LHWCA has long allowed companies to reduce their security burden if they meet certain risk- and performance-based criteria, the department had not previously taken action to provide that relief. The newly published guidance formally establishes a framework for doing so.
The department states that publishing the guidance advances its goal of protecting injured workers while reducing regulatory and economic burdens on job-creating industries and promoting economic growth.
In addition, the action aligns with President Trump’s Executive Order, “Restoring America’s Maritime Dominance.” According to the department, the guidance will reduce the economic and regulatory burden on shipbuilders by lowering insurance costs and helping American-built ships compete more effectively with foreign competitors.
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.