With the end of the USACE DBA Insurance program on September 30, 2013, contractors must now look to the open market for replacement DBA Insurance. According to some underwriters, the DBA open market is currently experiencing an onslaught of submissions—in some cases, six to eight per day for upcoming renewals, new awards and contracts that were awarded prior to the termination of the USACE program. Some contractors are already reviewing DBA programs that renew as far in the future as March 2014 to be sure they have time to educate underwriters about their exposures and obtain the most competitive rates available.
Getting Started: the DBA Insurance Review Process
While a six-month jump start may be a bit early, it’s recommended that contractors begin the renewal process at least 90 days in advance of the DBA renewal date, even if the USACE contracted work won’t begin until six months into the policy term. Since some USACE contractors are finding they are able to secure a lower rate in the open market, it’s essential to begin negotiation with underwriters as early as possible . While lower rates won’t be the case for all contractors—rates will be dependent on the type of work being done—it has been reported that CNA (the carrier for the USACE DBA program) may allow a contractor to end a policy with them prior to the expiration date and replace it with an open market policy.
As part of the review process, contractors seeking replacement DBA Insurance in the open market will need to request their policy loss runs (claims history) from the USACE program and spend time with their insurance broker analyzing the losses, making note of any that resulted from an Act of War or Terrorism. Since most USACE work contracts were awarded for work in war-ravaged Iraq and Afghanistan, DBA underwriters are sensitive to the nature of the work, and, in most cases, loss ratio shouldn’t negatively impact rates for new DBA coverage. However, many brokers didn’t manage prior claims because the rates were set in the USACE program, thus there was no need to analyze loss ratios. Now that the program has ended and losses are again being analyzed by open market underwriters, many contractors may have losses that could come back to haunt them depending on the nature of the claim and the amounts held in reserve to cover the loss.
Beyond the Insurance Review Process
In addition to a thorough DBA Insurance review process, contractors should also spend some time reviewing their current contracts in order to identify any possible premium increases that may result from the move to an open market policy. This affords contractors the opportunity to reach out to the contracting officer to renegotiate existing contracts with USACE and ensure that any changes in their DBA premium from a new open market DBA policy will be reimbursable to the contractor.
The LATITUDE DBA Insurance program is an excellent resource for understanding the complexities of DBA Insurance, including claim filing procedures. Our team of experts has more than 25 years of experience and extensive knowledge of DBA. Contact the LATITUDE DBA Insurance program today to explore your coverage options for your DBA Insurance.
Acquiring Defense Base Act (DBA) insurance coverage can be an overwhelming task for government contractors performing work outside the United States. That’s why it’s important to not only have a good general knowledge of the coverage afforded under the policy but to also seek out the assistance of DBA industry experts in order to ensure comprehensive coverage should the unthinkable occur.
What is Defense Base Act Insurance?
Defense Base Act insurance (DBA) is federal workers’ compensation coverage required for all U.S. Government funded contracts for work performed outside the continental United States. This includes work performed by private contractors and their subcontractor’s employees in Puerto Rico and all U.S. territories and possessions, except Guam. Benefits include coverage for:
• Loss of Wages
• Medical Expenses Related to the Injury Claim
Benefits also include coverage for claims resulting from acts of war and terrorism as well as capture, detention and kidnapping while working under a contract that requires DBA coverage.
Who is Required to Purchase DBA Insurance?
DBA coverage is required for all U.S. Government funded contracts for work overseas performed by private contractors. All employees of the contractor regardless of their “country of origin” are eligible for DBA benefits unless a Waiver is applied for by the Contracting Officer and approved by the Department of Labor prior to work beginning.
What if the Employee is Unable to Travel Home in a Conventional Manner?
DBA claims include the cost of medical evacuation for those claims where the employee is unable to be transported in a ticketed seat of an aircraft. The treating physician must authorize the transport of the injured employee to a neighboring country or back to their home country in order to obtain the necessary medical treatment.
Does Coverage Extend to Media Personnel Embedded with the Troops?
Media personnel who are “embedded with the troops” are eligible for DBA coverage because they are living and working with the troops on U.S. military bases. There is no signed contract required between the Media Company and the U.S. Military for the reporters to be eligible for DBA benefits. An example of this exposure would be David Bloom, the NBC Correspondent, who died of a blood clot behind his knee from traveling in tanks with the troops….his surviving spouse and children were eligible for DBA death benefits.
About the author: Sara Payne is a Senior Vice President at Lockton Affinity, LLC, and a 25-year veteran of DBA insurance program administration. Sara and her team administer the LATITUDE Global Contractor Insurance program developed by Lockton Affinity to meet the DBA and foreign package insurance needs of overseas government contractors.
This article is the third in a series designed to help U.S. Government contractors with employees traveling overseas review their current coverage and plan for the future.
If you have employees working OCONUS (outside the contiguous United States), either temporarily or permanently, your business is responsible for bodily injury and property damage claims resulting from incidents occurring overseas. To help determine whether they need to acquire additional insurance coverage for this exposure, contractors should ask themselves the following questions:
Does your General Liability insurance policy extend to incidents occurring outside the U.S. when the suit is brought in the U.S.? Most domestic package policies include a “worldwide territory” and provide coverage for your employees who are working outside the U.S. temporarily. However, the definition of “temporary” can vary from one policy to the next, so it is important that you understand the definition as it relates to your General Liability coverage.
Would your domestic General Liability insurance policy provide local legal representation should a claim for damages be filed in the country where work is being performed? In most cases, the answer to this question is “no”. And if your insurance policy does provide coverage, chances are your business would have to pay for local counsel up front, then request reimbursement of the legal fees from the insurance carrier.
Would your domestic Auto policy provide Hired and Non-Owned Auto Liability and Physical Damage for a rental vehicle leased by an employee overseas? Domestic Auto policies provide coverage only in the U.S. and its territories and possessions as outlined in the territory clause. No coverage is afforded outside that territory. That means that your worker in Puerto Rico would be covered, but the same worker in Cuba would not.
Would your domestic Workers’ Compensation policy respond if an employee were injured while working overseas under a commercial contract? Coverage availability is dependent upon your state’s extraterritorial provision regarding employees working outside the U.S. temporarily. Since this varies from state to state, it is possible that your worker would not be covered by your Worker’s Compensation policy — and you would be responsible.
To eliminate any potential gaps in insurance coverage, contractors with employees working overseas should secure a Foreign Package policy. This type of global insurance policy provides coverage for the needs of your overseas workers while protecting your domestic insurance policy from overseas losses.
For additional information about Foreign Package coverage or to request a full review of your foreign insurance program, please contact Sara Payne, a 25-year veteran of foreign and DBA insurance program administration, at 800-291-6182.
COMING NEXT MONTH: an insurance check-up for your Kidnap & Ransom Coverage
This article is the second in a series designed to help U.S. Government contractors with employees traveling overseas review their current coverage and plan for the future.
Is a Defense Base Act insurance policy enough when your company has workers overseas? Maybe not. If an employee working overseas has a heart attack or stroke, there’s a good chance that a DBA insurance policy will not respond. In order for an incident to be an eligible DBA claim, it must be occupational in nature or work-related. Otherwise, it will be treated as a medical claim.
To help decide whether your company needs more insurance coverage for this exposure, you should ask yourself the following questions:
Would the medical coverage under your Employee Benefit Plan respond to a claim like this? While some PPO plans may provide an out-of-network benefit, HMO plans provide no coverage overseas.
Would that Plan pay for medical evacuation services if emergency transport of the employee were required? Most domestic health plans do not provide medical evacuation services outside the U.S.
Would the Plan wire a “good faith” deposit to the overseas hospital so medical treatment could begin? Many hospitals overseas will not accept an insurance card from the U.S. and may demand a deposit to admit a patient to the hospital.
It’s likely the answer to one or more of these questions is “no.” That’s why Business Travel Accident (BTA) & Medical Expense Coverage is so important to government contractors with employees working overseas. This policy provides the coverage necessary to:
Stabilize the employee in a hospital overseas
Arrange a “medical evacuation” so that the employee can be returned home
Repatriate mortal remains in the event of a death by natural causes
Provide medical monitoring of the patient while keeping the patient’s family in the U.S. updated on his/her condition
Protect the company’s Employee Benefit Plan claim experience against an overseas medical claim
For additional information about BTA & Medical Expense coverage or to request a full review of your foreign insurance program, please contact Sara Payne, a 25-year veteran of foreign and DBA insurance program administration, at 800-291-6182.
COMING NEXT MONTH: an insurance check-up for your Foreign Policy