With the U.S. involvement in the war on terror in Iraq and Afghanistan, the DBA exposure for contractors and DBA Insurance carriers has changed significantly due to the hiring of locals native to the country where work is being performed. Like U.S. workers employed under DBA contracts, locals are also eligible for DBA benefits. This eligibility creates a number of challenges in the claims management process—ranging from cultural differences to financial disparities. Some of these challenges are outlined below:
Injury during commute
Typically, a local working in their home country under a contract that requires DBA is not entitled to DBA benefits if they are injured or killed during their commute to or from a work site. Commuting to and from a location under watchful eye by insurgents is a known occurrence, and claims for injury or death during a commute are only compensable if it can be proven the employee was the victim of a retaliatory attack by insurgents as a result of their employment by Westerners.
Proof of wages
For DBA carriers to pay loss of wages benefits, proof of wages for work performed by the injured or deceased employee must be presented for the previous 12 months. While wages in the U.S. are typically documented by an employee’s tax filing or W2 statement, many workers in third-world countries are paid by local employers in cash and wages are not carefully documented. In order for wages to be proven at the time of an injury or death, it’s imperative that wages be documented. Contractors with overseas contracts need to keep record of the wages for local workers via a wage statement so that it can serve as confirmation later, if needed.
Due to volatile situations in many countries, locals often fear being terminated from their employment or even killed for accepting DBA benefits and, therefore, often hesitate to admit they have been injured on the job. It’s very important that local employees are educated about their rights to receive DBA benefits if they are injured and, likewise, employers and DBA Insurance carriers must be cognizant of the risks the employees face in collecting benefits.
Proof of marriage and birth
In order to provide a death benefit payment to a surviving spouse and eligible surviving children, DBA requires that both marriage and birth certificates of all dependents and for the deceased employee be presented to confirm ages and authenticate legal status as dependents. However, in some countries, such as Iraq and Afghanistan, births and marriages are not documented as precisely as they are in the U.S. Oftentimes a birth is only written in a book in the family home—a more formal record isn’t made. Because of the differences in how these types of events are recorded, many DBA carriers have agreed to accept alternate proof of marriages and births in recent years based on Department of Labor approval. This could include a written statement by a judge or tribal leader who performed a marriage ceremony, or a statement by a brother advising of a marriage and ensuing births of the children as a result of the union.
If a single person who lives with and supports his or her parents is killed during employment, the parents are entitled to a reduced death benefit assuming it can be proven that the employee was the sole source of income supporting the family.
Protection for widows
In many cultures, surviving female spouses are not entitled to receive death benefits if their husband is killed. Since accepting DBA benefits is often viewed as receiving aid from the Western culture, DBA carriers must be diligent to protect the anonymity of these widows in order to help prevent a threat to family members by insurgents.
Hindrance of benefits delivery
Many locals in the Middle East do not have access to banking systems, making electronic delivery of DBA benefit payments problematic. Likewise, there is not a reliable mail delivery system, which also renders the delivery of a payment by check to beneficiaries difficult. To assist in the transfer of benefits to entitled recipients, DBA carriers will often use a vendor to assist the local with establishing a bank account in order to receive DBA benefits via wire transfer. Again, precautions must be taken so as to not jeopardize the identity and security of the beneficiary.
As the DBA Insurance broker for Allied World Assurance, the LATITUDE DBA Insurance team has a deep understanding of the complexities of Defense Base Act coverage and the benefits entitled to covered employees. Contractors with questions about coverage or those seeking DBA coverage should contact LATITUDE DBA Insurance today.