June 25, 2004

Iraq contractors and workers compensation

In the last few months, the deaths of independent and military contractors in Iraq have been much in the news. According to the Brookings Institution, there are more than 15,000 security contractors in Iraq, making independent contractors the second largest force after the U.S. military.

Recently, the Department of Labor has issued statistics about workers compensation claims for U.S. contractors, including those in Iraq. Of the 771 workers comp claims filed by U.S. contractors so far this year, 345 occurred in Iraq. Of the 66 deaths, 57 occured in Iraq.

Workers compensation for contractors is mandatory under the U.S. Defense Based Act (DBA) of 1941. Coverage applies to both U. S. workers and any foreign subcontractors who are not covered under their own country's workers comp laws. Since Iraqi contractors are not covered by workers comp, any contractors must be covered under the DBA.

According to the DOL, there are three major insurance carriers currently providing DBA coverage in Iraq: ACE-USA, AIG, and CNA, although there are more than 700 carriers and self-insured employers authorized to write coverage under the Longshore and Harbor Workers' Compensation Act.

"DBA benefits are include disability, medical, and death benefits to covered employees who are injured or killed in the course of employment, whether or not the injury or death occurred during work hours. Compensation for total disability is two-thirds of the employee's average weekly earnings, up to a current maximum of $1,030.78 per week. Compensation also is payable for partial loss of earnings. Death benefits are half of the employee's average weekly earnings to the surviving spouse or to one child, and two-thirds of earnings for two or more such survivors, up to the current maximum weekly rate. Permanent total disability and death benefits may be payable for life, and are subject to annual cost of living adjustments." DOL

Insurers are not mandated to provide this coverage. As an inducement, the government reimburses insurers for war related claims:

"Labor Department officials said they had no cost estimate for reimbursements of Iraq-related claims, but given the maximum payment of $1,030.78 per week and the number of injuries and deaths, it could well climb into the multimillions. In past years, annual reimbursement costs under the War Hazards Act have ranged from $1 million to $2 million.

...Rates have ranged from an early low of $10 per $100 of an employer's payroll to as much as much as $40 per $100 of payroll in recent months, said Hartwig of the insurance institute. That means an employer with a million-dollar payroll would pay between $100,000 and $400,000 in premiums.

Insurers also are limiting terms of policies, such as not offering as much coverage in some locations or for certain types of jobs, and raising deductibles."

Countries submitting the most claims since September 2001:
529 - Iraq
317 - Kuwait
60 - Bosnia-Herzegovina
52 - Colombia
51 - Saudi Arabia
48 - Germany
44 - Afghanistan
30 - Marshall Islands
26 - Qatar
(source: DOL)

Contractors submitting the most claims since September 2001:
346 - Halliburton
309 - CSC Dyncorp 309
307 - Raytheon
157 - Titan
142 -CSA Ltd.
118 - ITT Industries
99 - L-3 Communications
96 - General Dynamics 96
89 - Northrop Grumman
54 - Washington Group International
(source: DOL)

More information:
Department of Labor Defense Based Act
U.S. Chamber of Commerce - Doing Business in Iraq FAQs
Services for U.S. Citizens in Iraq"
ABC News - Independent Contractors Fight and Die in Iraq, But Who Do They Answer To?
MSNBC - U.S. faces big bill for workers' comp in Iraq
Michigan Comp Law

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About this Entry

This page contains a single entry by Julie Ferguson published on June 25, 2004 1:56 AM.

Weblog news roundup was the previous entry in this blog.

Workers compensation jurisdiction: injury in one state, employment in another is the next entry in this blog.

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