33 U.S.C. § 932 — Security for compensation

(a) Every employer must secure payment of compensation under this chapter in one of two ways. (1) The employer may insure and keep insured the payments with a stock or mutual company, association, person, or fund that is authorized under United States or state law to insure workers compensation and is authorized by the Secretary to insure payments under this chapter. (2) The employer may give the Secretary satisfactory proof that it can pay the compensation and receive permission to pay it directly. As a condition, the Secretary may require the employer to deposit with a designated depository an indemnity bond or securities, at the employer’s choice. The Secretary decides the kind and amount based on the employer’s financial condition, payment history, and other relevant factors. The conditions may let the Secretary, if the employer defaults, sell enough securities to pay awards or sue on the bonds so compensation is paid promptly. An employer that secures compensation this way is a self-insurer. (b) When authorizing a carrier to insure compensation, the Secretary may consider recommendations from a state authority supervising carriers or workers compensation. The Secretary may limit a carrier’s authorization to a particular territory. A marine protection and indemnity mutual insurance corporation or association authorized to insure liability for personal injury, death, and related vessel losses under a mutual-assessment plan is treated as a qualified carrier. After a hearing where the carrier may appear personally or through counsel and present evidence, the Secretary may suspend or revoke authorization for good cause. A suspension or revocation does not affect liability the carrier already incurred.