“I give you an insider’s view of Defense Base Act Law, with no sugar coating. No lawyer talk, no double talk. Ever."
Defense Base Act Lawyer Bill Turley - Author of the 5 Star book - Win Your Defense Base Act Case
Defense Base Act Insurance Companies and DBA Coverage
When you research “Defense Base Act Insurance Company & “DBA Coverage” what you’ll probably see is webpage after webpage by DBA insurance companies. This article is different.
I give you an eye-opening insider’s view of the Defense Base Act insurance companies. I don’t pull punches. I give you unsweetened, unvarnished, no B.S. truth about Defense Base Act insurance companies.
I've been representing seriously injured overseas civilian contractors for years. I've had one of the two largest DBA law firms that represent folks just like you.
What is in this article is my take. Some I got from talking to DBA insurance company lawyers, adjusters and supervisors over the years, some I got off keeping up with the DBA insurance companies and some I got because I keep my ear to the railroad tracks, so to speak.
If you’re in the DBA insurance “game” you should know this stuff. From contracting company owners, managers or the like.
If you’re an overseas civilian contractor and/or you have a DBA claim currently, then you really need to know the facts of life.
It ain’t pretty.
You can buy the book on amazon.com or claim your free copy of Win Your Defense Base Act Case here. I guarantee that my book will help put you in the position for you get the best possible result for your DBA case. My book is all about helping you avoid the common case-ending mistakes that people with legitimate DBA claims make all the time.
Bad stuff doesn’t discriminate
While this article is geared for folks that are injured and have a DBA case, if you’re an owner, manager and/or supervisor in an overseas civilian contracting company then I suggest you listen up. Unlike most workers' compensation systems, even the owner and president of overseas civilian contracting companies that go overseas, must also be covered by DBA insurance.
Know this: Even if you’re the owner, manager, supervisor or whatever type of “executive” - - if you get injured overseas - - then you’re going to have a Defense Base Act case. I’ve seen this first hand.
Both enemy combatants and the fickle finger of fate don’t discriminate against who gets truly messed up. They say “war is hell” for a reason. This may all get really personal one day.
In other words, if you go overseas to where your company is working under U.S. military, U.S. government and/or U.S. State Department contracts - you have skin in the game, so to speak.
Getting injured is a great equalizer
If you’re injured overseas, then you have a DBA claim against the DBA insurance company. It’s a court case. You against them. To them, you’re the same if you’re the lowest level worker in the company as you are if you’re a vice-president in the company.
Either way, you’re up against an insurance company. You’re trying to get what you’re entitled to under the law. You may have been special before. But, you’re not now. Now you’re a claimant. In a court case.
So, I suggest you buckle-up. You’re not going to hear what I talk about in this article anywhere else.
But, just like the worst tasting medicine, knowing what I tell you in this article is going to make you stronger.
A quick overview
The Defense Base Act requires all U.S. government contractors and subcontractors to secure workers' compensation insurance for their employees working overseas. The U.S. Department of Labor, Office of Workers' Compensation Programs (OWCP), Division of Longshore and Harbor Workers' Compensation, administers the Defense Base Act.
Billion-dollar Defense Base Act insurance companies (who’s on first)
This is where we need to start off our discussion. By letting you know what you’re dealing with here. There are only a handful of “players” that “write” Defense Base Act insurance.
They’re all billion-dollar insurance companies.
According to one of the pages on the U.S. Department of Labor website, “Three major insurance carriers are currently providing Defense Base Act insurance coverage. They are ACE-USA, AIG, and CNA”. As I explain below, these may be the DBA insurance companies providing DBA insurance to "high-risk" countries such as Iraq and Afghanistan.
However, as I explain below, there are other places on the U.S. Department of Labor site that suggest there are currently five DBA insurance companies. And I have heard from other sources, that there are currently seven DBA insurance companies writing DBA insurance.
I know it’s not three. I have doubts that there are seven DBA insurance companies currently writing DBA insurance.
It seems like it’s five.
As they say in baseball, you can’t tell the players without a scorecard.
Like I said, this seems correct to me.
DBA insurance brokers
In the real world, the contracting companies hire a broker to acquire DBA insurance. The brokers then get quotes from the DBA insurance companies. Many brokers specialize in different type of business and/or countries. The brokers will have different relationships with the DBA insurance companies.
What is a constant, however, is the DBA insurance broker will be in the ear, so to speak, of the contracting company’s executives telling them how to lower losses - both on the front end and the back end (read: defending your DBA claim).
It gets expensive to deny and defend claims
Remember, this is an adversarial system. Meaning, if your DBA claim is denied (and you're unable to settle your claim), then you can take your DBA case to trial and have the Judge decide your case. You may win or you may lose. It’s part of the trial system.
However, either way - the DBA insurance company has to pay a lawyer to fight your case and pay for the defense costs. If you win your DBA case at trial, the DBA insurance company has to pay your attorney fees. And, then they have to pay you the benefits you’re awarded by the Judge.
Nevertheless, different insurance companies have different approaches to paying claims and defending claims. Some settle more than others. Some take more cases to trial.
Early on, many - if not most - of the DBA insurance companies chose to fight and defend DBA claims, rather than try and settle them for reasonable money. Later, the older more established players decided to try and settle some cases, rather than fight everything.
That isn’t necessarily the case with all of the “newer” DBA insurance companies.
The DBA insurance companies - who you’re dealing with
Here is a quick overview of the Defense Base Act insurance companies:
AIG - Insurance Company of the State of Pennsylvania
The Insurance Company of the State of Pennsylvania is also known as AIG. AIG is one of the largest U.S. insurance carriers. AIG is listed on the New York Stock Exchange. According to analysts AIG has a market cap of $51 billion dollars.
AIG is the biggest DBA insurance company in regards to the number of Defense Base Act claims and the number of overseas civilian contracting companies that have been insured by DBA insurance companies.
In the last year, AIG has had 2,147 DBA cases.
AIG has been in the DBA insurance business since the beginning of the Iraq and Afghanistan wars.
AIG claims handling philosophies have appeared to wax and wane over the years. There were times when AIG seemed to fight every claim, tooth and nail. Then there was a time, it seems, when AIG was settling claims. In other words, at times AIG has seemingly paid more money to settle DBA claims than at other times.
Allied World National Assurance Company (AWAC) and Defense Base Act insurance
According to their website, AWAC has a $3.4 billion market cap and they are a subsidiary of Fairfax Financial Holdings Limited. “Allied World” is listed on the New York Stock Exchange. According to their website, "Allied World” provides Defense Base Act insurance.
In the last year, AWAC has had 2,107 DBA cases. Which confirms that AWAC is currently a major player in the DBA insurance business.
AWAC was relatively late to the DBA insurance coverage. Perhaps entering the market with a measure in 2009-2010 timeframe. And it was really after this that they became a player in the industry.
Continental Casualty Company (CNA) and Defense Base Act insurance
CNA is listed on the New York Stock Exchange. According to analysts, CNA has a market cap of $13 billion. CNA’s attorneys and adjusters are based out of Chicago.
According to our sources, CNA was getting out of the Defense Base Act insurance business. However, the current CNA website states that CNA provides Defense Base Act insurance.
One analyst has suggested that CNA attempted to profit by adding more risks to their portfolio of DBA accounts. The result was costs soaring as claims outpaced premiums.
In the last year Continental Casualty Company has had 329 DBA cases.
When you combine the two company's claims - CNA has had the second largest number of DBA claims. Based upon the DBA cases that my office has handled over the years, this seems correct.
The relatively low number of new DBA claims in the last year certainly suggests that CNA has really cut back on writing DBA insurance.
CNA was also one of the early players in writing DBA insurance coverage. CNA’s approach to defending claims has stayed more consistent than most.
ACE American Insurance Company
It was reported that in 2015, ACE acquired Chubb Insurance for $28 billion dollars, the largest insurance acquisition ever, at that time.
In the last year ACE American Insurance Company has had 187 DBA cases. This suggests that ACE is not writing as much DBA insurance as they once did.
Zurich American Insurance Company
It is reported that Zurich has a market cap of $50 billion and is the 10th largest insurance company in the world.
In the last year Zurich American Insurance Company has had 29 DBA cases. Which suggests that the “new” Zurich DBA claims are probably occupational disease and/or PTSD claims.
Starr Indemnity & Liability Company
According to analysts, Starr Companies is a privately-held global financial services company. Starr Indemnity currently has a Defense Base Act webpage the states it provided DBA insurance. It states, “Gallagher Bassett is Starr Insurance Companies partner in Defense Base Act claims processing. Their international network and dedicated Starr specific Defense Base Act claims team manages claims locally and globally for our clients.”
According to the online insurance journal, “Starr Wright Insurance Agency, Inc. (Starr Wright USA), a division of Starr Insurance Companies, has a launched a distribution channel for Starr Insurance Companies’ Defense Base Act insurance coverage, specifically to serve the needs of small federal government contractors.....Starr Insurance Companies (or Starr) is a marketing name for the operating insurance and travel assistance companies and subsidiaries of Starr International Company, Inc. and for the investment business of C. V. Starr & Co., Inc. and its subsidiaries.”
In the last year Starr Indemnity & Liability Company has had 1,325 DBA cases. This number shows that Starr is still active in the DBA insurance business.
Of course, time will tell if Starr has charted the correct course in DBA claims handling.
Other DBA insurance companies
The above listed DBA insurance companies have been the major players in the DBA insurance world. Here is a partial list of other DBA insurance companies that have written DBA insurance: Liberty Mutual Insurance Company, Chubb Indemnity Insurance Company, Arch Insurance Company, Fidelity and Casualty Co. of NY, and some even smaller companies.
Chubb currently has a Defense Base Act coverage webpage. Of interest is the following on Chubb’s website:
Chubb Limited, the parent company of Chubb, is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index.
Insurance provided by ACE American Insurance Company and its U.S. based Chubb underwriting company affiliates.
Thus, Chubb is writing DBA insurance through ACE (see above).
It’s all about risk
In the insurance industry, it’s all about risk. There are few areas of insurance with as much risk as Defense Base Act insurance.
Think about it for a moment. The insurance company is “insuring” a war theater, in many instances. What is more risky than a freaking war?
Low risk countries vs. high risk countries
Over the years the DBA insurance companies have come and gone. They come in with seemingly bravado and sometimes they go out, with much less bravado. For high risk countries the premiums are relatively large. It’s a quick way to infuse cash into an insurance company. But when the claims keep mounting, the bottom line gets thinner and thinner.
We’ll get back to this in a moment - but the DBA insurance companies are going to fight DBA claims tooth and nail because in their view - every dime they pay claimants (read: overseas civilian contractors bringing DBA claims), the less profits they make, and in many cases the more in the red they end up. So they will attack you with a vengeance.
According to some sources there are currently three DBA insurance carriers that will insure overseas civilian contractors working in “high risk” countries. Such as Afghanistan, Iraq and the like.
There seems to be differing reports as to how many DBA insurance companies will currently l provide DBA insurance for “low-risk” countries. Yes, there is DBA related work in countries such as Germany and Canada. Obviously not as much, but the military bases, embassies and consulates in these countries need contracting work as well.
DBA insurance carriers have different risk aversions
Each DBA carrier has different preferences. For example, there are some DBA insurance carriers that only like large premium accounts. Some insurance carriers only like low-risk clerical/ office type work.
And there are other carriers that are willing to take on larger risk such as private security contractors in Afghanistan and Iraq.
More risk, more premiums
As one analyst explains, it all comes down to risk. The more risk there is for overseas civilian contractors in their work overseas, the more the DBA insurance carrier is going to charge in DBA premiums.
“A bad loss history”
If the overseas contracting company has a “bad loss history,” this will affect who is willing to provide them DBA insurance. Or, the insurance company will give them a higher premium rate. These companies with “bad loss histories” may not be able to get future government contracts.
It’s a jungle out there kiddies (you should know which way the wind is blowing)
Not to mix metaphors (again) but things are not all rosy in tinseltown for the DBA insurance companies. Meaning, their poor underwriting (not judging the future risk correctly) has put them in a bad spot.
I have heard this “off the record” from folks from the DBA insurance companies over the years. But, you don’t have to believe the gossip, so to speak. Here is an excerpt from AIG’s 2018 annual report 10(k):
For our Defense Base Act (DBA) business, adverse development in recent years...
We did recognize some offsetting unfavorable development in our Defense Base Act (DBA) business that covers government contractors in U.S. and non-U.S. military installations...
That is insurance company speak for, “we have been losing money on our Defense Base Act insurance coverage.” Or so it sure seems.
PTSD cases keep coming
Yes, war is hell. It seems one thing that the DBA insurance companies may not have anticipated is how many civilian contractors were going to get home and have PTSD symptoms.
Thus, even if the DBA insurance companies are out of the DBA insurance business - or they are currently writing more vanilla type DBA insurance for office workers, warehouse workers and the like - they are still getting PTSD claims filed against them.
In many instances it takes years for the PTSD to get to the point that it affects someone enough that they finally file a DBA PTSD claim.
The PTSD cases are not only being filed by ex-security consultants that were outside the wire and saw and experienced some really, really bad stuff (called stressors).
But also PTSD cases are being filed by the folks that worked in the FOB’s and were subject to mortars, rockets and/or suicide bombers. These folks had to get out of bed on a regular basis and run to a shelter like their life depended on it. Because they’re life did depend on them getting to a shelter when there was incoming mortar and missile fire.
They come home and try as they might to put it all behind them. Only, the nightmares and flashbacks get worse and worse over time. So, they file a DBA claim for PTSD. Long after working overseas.
Yes, war is hell.
It’s not a tough business to understand
The DBA insurance companies write DBA insurance for overseas civilian contracting companies. The contracting companies pay insurance premiums to the insurance companies. The insurance companies take in money in premiums. They then take that money and invest that money. Thus, the insurance companies have two sources of income: Collecting premiums, and investing money that is paid to them in premiums.
Every dime that the DBA insurance company pays out in benefits in your DBA claim, comes right out of the bottom line of the insurance company.
The more money the insurance company pays out in claims, the less earnings (read: profits) they earn.
In this respect, it’s not a difficult business to understand. To make money the DBA insurance companies have to pay out less money than they receive in premiums and investments. When this is a red number or a negative number, there is a lot of pressure on the insurance company executives to turn things around and start making money.
Which is just about where your DBA claim comes in.
All of this adds up to the DBA insurance companies continuing to lose money on their DBA insurance.
What does this mean for me - if I have a DBA claim?
The fact that the DBA insurance companies have been losing money on DBA insurance means that the insurance companies are going to pull out all the stops to keep from paying you the money that you’re owed under the DBA. I suggest you read on.
There are two ways to limit “losses” in the insurance industry.
First, is to lower risk on the front end.
Here is a direct quote from an executive in the DBA insurance industry:
“This will end up creating a market for risk managers to run their operations with as little losses as possible, as getting favorable DBA rates will create a competitive edge in the bidding process.”
In other words, the less people get injured, the less risk on the front end, so to speak. If the company is proactive and doesn’t put its folks in harm's way - if you’ve been overseas in Iraq and Afghanistan, you know what I’m talking about here - then they don’t get injured as often.
However, once there has been an injury, the train has left the station, so to speak.
Second, is to limit losses by denying claims and defending claims
If you’re an injured overseas civilian contractor - this is where you fit into this “Defense Base Act insurance industry” spectrum.
So, you’re facing two “fronts”, so to speak. First, is the DBA insurance company looking for any reason to deny your claim and trying to keep you from getting DBA benefits. I’ll get into this a lot bit more later.
Second, is the overseas civilian contracting company helping the DBA insurance carrier in finding reasons to deny your claim. If you’re thinking, "why would they do that?" ....Then you might have missed it when I referred to it earlier.
It’s all based upon quarterly earnings (profits)
Back to the DBA insurance companies....
There is intense pressure in the corporate world for companies to show quarterly earnings. Meaning, profits.
Stock prices go up and down depending on whether companies perform as well as the analysts anticipate that they will.
In this world and putting all this information together regarding the Defense Base Act insurance companies - they are generally losing money. The way for the insurance companies to lose less money is to deny and defend claims (read: “losses” in the insurance world).
It is under this tapestry of backdrop that your DBA insurance adjuster is being pressured to deny DBA claims and/or limit the amount of money paid out.
It’s why DBA insurance carriers deny legitimate claims
It’s because of all the foregoing pressures, that legitimate DBA claims are being denied. It’s because of all of this that the DBA insurance companies have designed trips and traps for unsuspecting folks with DBA claims. The insurance companies have to come up with reasons to deny legitimate claims.
Once you fall for one of their tricks or traps - then you no longer have a “legitimate” DBA claim. Your claim will be denied, your benefits will be stopped. You will receive an LS-207, Notice of Controversion and then you will have to fight in order to get your DBA benefits.
Nothing is more important than you telling the truth
You have a court case. That is what a DBA case is. If the Judge in your case doesn’t believe you, then you will lose your case.
Because of this, nothing is more important than your credibility.
You have to tell the truth. About everything.
The DBA insurance company is going to attack your credibility and character. They are looking for ways to make you look like you're lying.
Why you shouldn’t do anything until you read my book - Win Your Defense Base Act Case
I strongly suggest that you don’t do anything regarding your DBA case until you read my book. In fact, many of the reviews on amazon.com will tell you the same thing. There is a reason for that. It’s because you need to know about the ways the DBA insurance company is going to try and trick you and trap you, before you make one of these case ending mistakes.
Don’t talk to the adjuster, sign any forms (never sign any releases), give a recorded statement, go to your next medical appointment, go the defense medical examination (also called an IME), attend an informal conference, go to a Labor Market Survey appointment, give a deposition, hire the wrong Defense Base Act attorney, or do anything else related to your Defense Base Act Case until you read my book - Win Your Defense Base Act Case.
Strength vs. Weakness
Here is the "truth" with your Defense Base Act case. If you want to get what you are entitled to under the DBA - you have to be ready and able to take your case to court.
You have to be prepared to win. Hoping for a good settlement is a fool's errand. You want to, and need to negotiate from a position of strength. You don't do that unless you are prepared to win in court.
“But, I have a legitimate DBA case, I’ll be good”
You might be thinking, "I have a legitimate case, I'm telling the truth, I'm good."
However, that isn't the case. Not even close.
They use these tricks and traps to get out of paying money benefits to folks with legitimate claims. It’s what they do.
My book, Win Your Defense Base Act Case is designed to help you avoid these case killing mistakes.
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This article isn't legal advice
These discussions and/or examples are not legal advice. All legal situations are different. These testimonials, endorsements, photos and/or discussions do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, or your particular case/ situation. Every case is different. There are any number of reasons why DBA cases are not won and/or are not as successful folks might have hoped for.
Just because we have gotten great results in so many other Defense Base Act cases, doesn't guarantee in particular result in other cases. Including, your DBA case. Every case is different.