Under the LHWCA, the "security deposit" (also called a deposit of security or securitization) is collateral insurers or self‑insurers approved to write Longshore and Harbor Workers’ Compensation Act coverage must place with OWCP to guarantee payment of compensation and medical benefits. It is intended to secure benefits if a carrier defaults or becomes insolvent and to cover gaps where State guaranty funds do not apply. Acceptable forms include indemnity bonds, letters of credit, or negotiable securities (choice of the carrier, subject to Office approval).
The new DOL guidance does not publish a single numeric formula in the news release; it requires OWCP to consider risk‑ and performance‑based factors (company financial health, insurer’s LHWCA experience, claims payment timeliness, and State guaranty fund gaps) when determining an insurer’s required security. The implementing regulations (20 CFR part 703) set the framework (types of collateral, application and review process), while the guidance explains how OWCP will weigh the listed factors to calculate an amount case‑by‑case rather than a single statutory formula.
OWCP approves insurers to write LHWCA policies through its Division of Longshore and Harbor Workers’ Compensation (DLHWC). Approved carriers must submit an annual application to the Branch of Financial Management and Insurance documenting LHWCA liabilities and financial information; OWCP reviews ratings, state guaranty‑fund exposure, claim payment history and carrier reports and may require deposits or adjustments under 20 CFR part 703. OWCP also examines carrier accounts and can seize deposits on default or insolvency.
The guidance says OWCP will continue to prioritize injured workers by keeping security requirements tied to the carrier’s ability to pay and to State guaranty‑fund coverage; deposits secure payment of compensation and medical benefits on default or insolvency. Existing regulations give OWCP authority to require and seize deposits, to set amounts, and to examine carrier accounts—safeguards intended to protect benefit payment continuity while permitting OWCP to consider carrier performance when reducing security.
The guidance is targeted to industries identified as "vital" (shipbuilding, resource extraction, defense) but does not limit relief to particular company sizes in the announcement. In practice, the firms most likely to see reduced security costs are those within those sectors that demonstrate stronger financial health, long experience with LHWCA policies, strong claims‑payment performance, and limited exposure from State guaranty fund gaps—i.e., financially stable, well‑insured firms and carriers with good LHWCA loss histories.
The DOL notice said the Guidance for Insurance Carrier Security Deposit Requirements is scheduled for publication in the Federal Register on Feb. 9, 2026; OWCP’s security‑deposit rules in 20 CFR part 703 already require annual applications and permit OWCP to act without a separate notice period for individual security determinations. The Federal Register publication of the guidance is a notification (not a rulemaking); the Department indicated this is guidance, so it does not by itself trigger a formal notice‑and‑comment rulemaking, though stakeholders can raise concerns with OWCP through routine engagement channels.
The guidance is presented by DOL as aligned with Executive Order "Restoring America’s Maritime Dominance" (the press release links the action to that EO) but it is an OWCP guidance document implementing existing LHWCA regulatory authorities (20 CFR part 703). In short, the guidance is not a standalone Executive Order itself; it is an agency policy action described as consistent with the EO’s maritime goals while using existing statutory and regulatory authority to change how OWCP calculates security amounts.