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Longshore Authorization

Authorization requirements of the USDOL to write LHWCA insurance.;

Letter from US Department of Labor:
Employment Standards Administration
Office of Workers' Compensation Programs
Division of Longshore and Harbor Workers' Compensation
Washington, D.C. 20210

Requirements for Authorization to write insurance under the Longshore and Harbor Workers' Compensation Act (LHWCA).

The following information and instructions pertain to the requirements for authorization to write insurance coverage under the Longshore and Harbor Workers' Compensation Act and extensions, Defense Base Act, Nonappropriated Fund Instrumentalities Act and Outer Continental Shelf Lands Act.

INFORMATION AND MATERIAL WHICH MUST BE SUBMITTED

(1) A letter signed by a corporate officer requesting authority to write coverage, including a statement of the company's underwriting intentions;
(2) Statutory Annual Statement for the three most recent years;
(3) Copy of the company's Articles of Incorporation;
(4) Copy of the Corporate by-laws;
(5) Copy of the Certificate of Authority issued by a State insurance department granting authority to write workers' compensation insurance;
(6) Copy of the most recent examination report of the company by a State Insurance Commissioner's office;
(7) Copy of the most recent report of the company's NAIC's IRIS financial ratios;
(8) Copy of the forms of policies and endorsements that will be used.

Five years experience writing workers' compensation coverage and a rating of "B+" or higher by the A.M. Best Company is required for authorization, along with satisfaction of the above documentary requirements.

Insurance carriers will be authorized to provide Longshore Act coverage only in those states where they are licensed by the State to write workers' compensation insurance. This state license requirement is waived in monopolistic states. We have identified these states to be Ohio, West Virginia, Washington, Wyoming, North Dakota and Nevada, as well as Puerto Rico. Each carrier should send to this office a copy of the state license in each state in which it intends to write Longshore Act coverage.

However, should there be an instance where an insurance carrier is specifically authorized to write Longshore Act coverage in states where it is not licensed it will be required to secure its Longshore Act obligations in the manner specified below.

In any state where the state guarantee, or analogous fund will not fully protect all of the Longshore Act obligations of an insolvent carrier, insurance carriers will be required to post security to secure these obligations. Security must be in the form of a surety bond issued by a surety company holding a Certificate of Authority from the Treasury Department as acceptable sureties on federal bonds, or a deposit of fully guaranteed negotiable securities with a Federal Reserve Bank, or a bank issued letter of credit from an approved bank.

The above requirement for posting securities is waived for insurance carriers rated "A" or higher by the A.M. Best Company. A Best rating of "A-" is not considered to be an "A" rating. This requirement is also waived for all business written through the National Reinsurance Pool operated by the National Council on Compensation Insurance or any other assigned risk pool providing full protection for Longshore Act benefits through reinsurance. Finally, this requirement is also waived for state insurance funds which are agencies of the state government.

The amount of security to be required will be determined by this Office after a review of the application. Any insurance carriers seeking authorization without the required Best rating must, if authorization is approved, secure all Longshore Act obligations in the same manner as specified above.

Sources
The agent or carrier can contact the local deputy commissioner of the DOL. Apparently, the local commissioners are willing to issue an advisory opinion relative to jurisdictional issues.


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The material in this document has been prepared and shared for informational purposes only and should not be relied upon as legal advice on any particular situation.