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.