The regulations in this subpart require certain insurance carriers
to deposit security in the form of indemnity bonds, letters of credit or
negotiable securities (chosen at the option of the carrier) of a kind
and in an amount determined by the Office, and prescribe the conditions
under which deposits must be made. Security deposits secure the payment
of compensation and medical benefits when an insurance carrier defaults
on any of its obligations under the LHWCA, regardless of the date such
obligations arose. They also secure the payment of compensation and
medical benefits when a carrier becomes insolvent and such obligations
are not otherwise fully secured by a State guaranty fund. Any gap in
State guaranty fund coverage will have a direct effect on the amount of
security the Office will require a carrier to post. As used in this
subpart, the terms ``obligations under the Act'' and ``LHWCA
obligations'' mean a carrier's liability for compensation payments and
medical benefits arising under the Longshore and Harbor Workers'
Compensation Act and any of its extensions.
