US Labour Department Issues Guidance On LHWCA Insurance Security

The US Department of Labour has published guidance outlining how insurers should calculate security requirements for policies written under the Longshore and Harbour Workers’ Compensation Act (LHWCA).

The notice applies to insurers covering sectors such as shipbuilding, resource extraction, and defence. The guidance explains factors to be considered when determining securitisation levels, including the financial position of insurers, experience in writing LHWCA policies, and timelines for payment of accepted claims. The department said the guidance aims to clarify how liability exposure is assessed while maintaining protections for injured workers. The LHWCA and its extensions, administered by the Office of Workers’ Compensation Programs, require employers to provide workers’ compensation coverage for employees in covered roles. Insurers approved to issue such policies must provide security to cover potential liabilities.

While the Act allows reduced security requirements based on risk and performance criteria, this option had not been implemented earlier. The department said the guidance aligns with the executive order on maritime policy and is expected to reduce insurance costs for shipbuilders and other covered industries.