U.S. Department of Labor Employment Standards Administration 

 Office of Workers’ Compensation Programs

 Division of Longshore and 

 Harbor Workers’ Compensation 

 Washington, D.C. 20210

 

Working for America’s Workforce 

DEPARTMENT OF LABOR 

Office of Workers’ Compensation Programs 

Division of Longshore and Harbor Workers’ Compensation 

Industry Notice 100 

Subject: Insurer Security Deposits; Request for Information 

 The Division of Longshore and Harbor Workers’ Compensation (DLHWC) has long required a 

security deposit from all self-insured employers, and from insurers under certain conditions. These 

security deposits provide the funds that may be necessary to continue timely benefit payments to 

claimants without shifting the cost to all other self-insurers and insurance carriers, through increased 

assessments for the Special Fund, in the event that an employer’s or insurer’s insolvency would 

otherwise prevent payments. 

 In the recent past, DLHWC has required deposits from insurers based on the A.M. Best rating of the 

individual insurers; if an insurer’s rating is A- or lower at the initial application for authorization, or 

falls to that level during participation, DLHWC requires a deposit. The amount of the deposit is based 

on DLHWC’s evaluation of the insurer’s exposure and financial history. The minimum deposit 

requirement has been $200,000 for insurers with a small and minimally exposed claims base. 

 DLHWC is seeking industry input into the evaluation of the security deposit practice. This Notice 

to the Industry is an invitation to submit your insight, ideas, and suggestions to DLHWC about how to 

improve the industry evaluation process to determine the circumstances under which DLHWC should 

require an individual insurance company to deposit securities as a condition of providing insurance in 

the Longshore system. Are there alternative rating mechanisms that would provide DLHWC with 

earlier and more objective ratings? Are there other methods of monitoring the financial condition of 

companies that would be more useful? What are the alternatives to the requirement of a security 

deposit that would adequately protect workers and the Longshore Special Fund from the costs of 

insurer insolvency? What incentives might be offered to companies to help avoid the problem? What 

industry driven practices might be adopted that would provide equivalent protections? DLHWC is 

eager to consider your ideas. 

 This request constitutes a general solicitation of comments from the public. No person is required 

to supply specific information pertaining to the commenter, other than that necessary for selfidentification, as a condition of the agency’s full consideration of the comment. Please respond not 

later than March 25, 2002. Written responses, on letterhead, should be addressed to: Michael Niss, 

Director, Division of Longshore and Harbor Workers’ Compensation, U.S. Department of Labor, 200 

Constitution Ave., NW, Suite C-4315, Washington, DC 20210. 

 
U.S. Department of Labor Employment Standards Administration 

 Office of Workers’ Compensation Programs

 Division of Longshore and 

 Harbor Workers’ Compensation 

 Washington, D.C. 20210

 

Working for America’s Workforce 

Electronic responses may be submitted to Niss.Michael@dol.gov. Please use the subject line, “Insurer 

Security Suggestions” and include your name, title, company, address, telephone number, and email 

address in your submission. 

 Signed at Washington, DC this 15th day of February, 2002. 

MICHAEL NISS 

Director, Division of Longshore 

and Harbor Workers’ Compensation Programs