Navigating the War Hazards Compensation Act (WHCA) has long involved a frustrating waiting game. Historically, carriers and employers have been required to front significant compensation payments to covered employees injured by war-risk hazards, only to face protracted delays waiting for federal reimbursement. H.R. 9520, “The War Hazards Compensation Reform Act,” introduced by Representative Michael Lawler on June 29, 2026, aims to fundamentally shift these administrative burdens.
The proposed bill introduces two major changes designed to protect the financial liquidity of carriers and contractors:
1. Penalizing Government Delays with Interest
Under current practice, delayed federal reimbursements force insurance carriers to absorb substantial carrying costs. H.R. 9520 tackles this by introducing mandatory interest payments.
If the Division of Federal Employees’ Compensation (DFEC) fails to reimburse an accepted claim within a designated window after receiving standard documentation the federal government would pay interest on the outstanding balance. Additionally, to prevent a bottleneck, the bill mandates that the DFEC hire at least 15 additional full-time employees dedicated solely to reviewing and processing WHCA claims.
2. Eliminating Unnecessary Collateral Requirements
The WHCA supplements the Longshore and Harbor Workers’ Compensation Act (LHWCA) by providing a funding mechanism to reimburse employers and insurance carriers for workers’ compensation benefits paid out due to war-risk injuries or deaths.
Under existing regulations, the Department of Labor has often required LHWCA insurance carriers to post steep collateral or financial security to back their open liabilities. However, H.R. 9520 explicitly states that the Secretary of Labor may not require an insurance carrier to post collateral, security, or other financial assurances for liabilities arising from claims reimbursable under the WHCA. This frees up capital for insurance providers, lowers entry barriers to the defense contracting market, and reduces overhead costs passed along to the employers.
This bill does not alter or reduce the benefits payable to injured employees or their survivors. Instead, it corrects a systemic bottleneck that has plagued the defense insurance market for years. By shifting the financial pressure of administrative delays back onto the federal government and removing arbitrary collateral obligations, H.R. 9520 should stabilize insurance premium pricing and increase the availability of competitive coverage options for overseas contractors.
What’s Next
H.R. 9520 was referred to the House Committee on Education and Workforce on June 29, 2026. We will continue to monitor the progress of H.R. 9520 as it goes through the legislative process.