U.S. Labor Department Eases Insurance Rules For Shipbuilders Under New LHWCA Guidance

The U.S. Department of Labor has issued new guidance that eases insurance security requirements for shipbuilders and other strategically important industries.

The guidance explains in clearer terms how insurance security deposits are calculated under the Longshore and Harbor Workers’ Compensation Act (LHWCA).

The department said the change is designed to reduce unnecessary financial pressure by introducing a more structured way to assess risk, without weakening protections for injured maritime workers.

Under the new system, several factors will be taken into account when deciding how much security an insurer must provide.

These include the insurer’s financial strength, its experience in providing LHWCA coverage, and how quickly it pays accepted claims.

While the law has always allowed security requirements to be reduced in certain cases, this is the first time a formal risk- and performance-based framework has been put in place.

Labour Secretary Lori Chavez-DeRemer said the guidance is intended to maintain worker safety while creating a fairer regulatory environment for businesses that support the country’s economic and national security interests.

The LHWCA and its extensions are overseen by the Department of Labor’s Office of Workers’ Compensation Programs.

The law requires private-sector employers to provide workers’ compensation cover for employees working in covered maritime roles.

Insurers approved to write these policies must post security with the department to cover potential liabilities.

According to the department, although existing rules allowed insurers to reduce their security burden if they met certain criteria, no formal guidance had previously been issued to make this process clear.

The new framework is expected to improve transparency, give insurers greater certainty about potential liabilities, and encourage faster claims payments.

The move supports President Donald Trump’s executive order on restoring America’s maritime dominance and is expected to lower insurance costs for U.S. shipyards.

Officials believe this will help American shipbuilders compete more effectively with foreign rivals. The guidance is scheduled to be published in the February 9, 2026 edition of the Federal Register.

U.S. shipyards currently produce about 0.2% of the world’s ships, compared with an estimated 74% built in China, a gap the administration has said requires a coordinated federal response, including new financing tools and incentives to attract private investment.

Reference: DOL

Source: Maritime Shipping News