Contractors working under U.S. Government contract overseas are required to procure DBA coverage for all of their OCONUS work. For contractors working under U.S. Army Corps of Engineers (USACE) contracts with policies that have expired, or will expire soon, failure to secure new coverage will result in a Stop Work Order being issued by the Contracting Officer when it’s discovered the USACE policy expired and wasn’t replaced.
With the termination of the USACE DBA Insurance program, contractors are now being introduced to the open market process of obtaining DBA Insurance, and it seems that some contractors are using an erroneous method of working with more than one insurance agent or broker to replace their DBA policies. This practice is causing confusion for the insurance carriers since each of the brokers are seeking quotes from the same DBA carriers under the same contractor name.
Why are contractors using multiple brokers? Because when one broker is unsuccessful in obtaining coverage for a contractor—perhaps due to a poor loss experience or large number of employees with low payroll—the contractor moves on to seek the help of other brokers, blanketing the DBA marketplace with their account. This is resulting in DBA Insurance carriers receiving the same submissions numerous times, creating confusion for the brokers and DBA Insurance carriers. It also gives a poor impression of the contractor’s intentions with regard to obtaining DBA coverage.
What contractors don’t realize is that the same DBA carriers are working in the market so working with a new broker will not change the status of their submission. The only way to overturn a declination of coverage from a DBA carrier is for a new broker to submit the contract with updated loss information and changes in exposures, security or payroll information that have not been submitted previously. This will allow the DBA carrier to re-evaluate the submission and determine if they’ll offer coverage.
A better way to work the market
A more efficient way to secure DBA coverage in the open market is to work with just one broker who is knowledgeable in the marketing and procurement of DBA, and it’s astute business practice for contractors to perform a pre-selection process when choosing that broker. By doing so, the contractor can be assured that the chosen broker is one whom will advocate on their behalf and work hard to obtain the best coverage and most competitive pricing available. In order for a broker to do an optimal job in placing coverage, it’s imperative they fully understand the exposures on a contract so the details can be accurately presented to the carriers.
- In the search for a DBA broker, it’s helpful to ask the following questions:
- How many clients do you currently have with DBA coverage?
- What is your total annual DBA premium volume?
- How many years have you been working in the DBA market?
- What DBA carriers do you place coverage with?
- With which carrier do you place the majority of your DBA business? Why do you place the majority of your business with them?
- What are your DBA claim reporting procedures?
- What other lines of coverage should I consider when reviewing the exposures I have for my employees overseas?
Once several brokers have been contacted, the contractor should choose the one that has best exemplified the work they will be willing to do on the contractor’s behalf should they be chosen to represent them. As long as a contractor continues to work overseas on U.S. Government contracts, DBA coverage will be needed, and a DBA broker should be viewed as a lasting partner that will ensure compliance with DBA requirements for the long-term.
Selecting a DBA broker is a crucial component to contract management. LATITUDE DBA is a broker you can trust. With more than 25 years of experience and extensive knowledge of the DBA marketplace, we can assist you in exploring your coverage options. Contact the LATITUDE DBA Insurance program today to begin a review of your DBA needs.