# Presentation: 127677

## Doing Business in the Middle East –

- US Government Contractor Basic Insurance Requirements*You and the Defense Base Act*

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## Required US Insurance for US Government contracted work in the Middle East and beyond

- Defense Base Act (DBA)
- Other insurance as required by contract

## What is the Defense Base Act or “DBA”?

- Congress passed the Defense Base Act in August, 1941 to cover construction workers on lend lease military bases outside the continental US
- In 1942, the Act was amended by the War Hazards Compensation Act to provide protection to all contractor employees engaged in work outside the US regardless of location, and compensation and cover injuries due to war risk
- Later amended in 1953 to include public works contracts with the US Government for the building of non-military dams, schools, roads and harbors.
- Again amended in 1958 to clarify coverage not only limited to war activities
- Today, DBA is interpreted as a law protecting virtually all employees working overseas on US Government contracts

## DBA and the US Longshore and Harbor Workers’ Act

- Extends the application of the US Longshore and Harbor Workers’ Compensation Act (USL&H)
- to employees working on US military bases overseas, and
- to employees of Federal contractors engaged in contracts outside the continental US (including Alaska & Hawaii)
- Administered by the Department of Labor(DOL)

## The Extension of the USL&H

- By extending the provisions of the USL&H Act, employees of Federal government contractors working overseas were assured protection of law that:
- was uniformly administered
- provided uniform benefits, regardless of
- the state in which the employee was hired, or
- the state in which the employee maintained residence, or
- Local law of the country the employee worked in

## Who is Covered by DBA?*

- All US Citizens employed on the job site
- All Third Country Nationals employed on the job site (unless a DOL waiver is obtained; not applicable in Iraq or Afghanistan)
- All Local Nationals employed on the job site (unless waiver obtained; not applicable in Iraq or Afghanistan)
- All employees on job site of all Federal sub-contractors.
- All subcontractors of the prime or letting Federal contractor
**Note: ** If a subcontractor does not secure coverage, responsibility lies with that of the prime or letting contractor

***The Act makes **_**no reference to the nationality of the covered employees**_**.**

## When is DBA Coverage Required?

- Military Bases outside the United States.
- Specific US Government contract for work outside the United States.
- Public Works contract through an agency of the United States to be performed outside the continental United States.
- Public Works in or on any US territory or possession.

## What are the Benefits under DBA?

- Disability, medical and death benefits
- to covered employees or their eligible survivors whether or not the injury or death occurred during work hours as long as injury or death deemed “work”-related
- Compensation for total disability is two-thirds of the employee’s average weekly wage, up to a current maximum of $1,030.78 per week
- Compensation is also payable for partial loss of earnings
- Death benefits are half the employee’s average weekly earnings to the surviving spouse or to one child, and two-thirds earnings for two or more survivors, up to the maximum weekly rate
- Permanent and total disability benefits are payable for life and subject to annual cost of living adjustments

## Waivers of DBA Requirements

- Who can be granted a waiver?
- Third Country Nationals (TCN)s
- Local Nationals
- When can a waiver be granted?
- When there is a local workers compensation program available, or
- Some other suitable form of compensation benefits (e.g. Employers Liability, Social Security) is present
- In the case of Iraq and Afghanistan, where no local workers’ compensation or similar program exists, the DOL has not and currently will not grant employer waivers for contractors working in country
_**Note**_**—**Only the Secretary of Labor may authorize a waiver

## Admin & Claims Requirements

- Reporting Provisions:
- Advise insurer of exposure
- Insurer files with the DOL – Form LS-570 (DB)
- Notice to Employees – Notice must be posted and maintained in a conspicuous place in and about the place of business – Form LS-241
- Claims Procedure
- Complete Form LS-202 (DOL) “Employer’s First Report of Injury”
- Complete in duplicate and file with the Deputy Commissioner, DOL in the appropriate district (NY for Iraq claims) _**within 10 days**_ from the date or injury or death

## Why DBA is absolutely critical?

_**It is the law**_
- Special DOL filings are required of insurer _and_ insured (contractor) for coverage and claims
_**Failure to secure DBA insurance carries stiff penalties for employers!**_
- If not secured, injured employees or their legal representatives may sue for damages and need not prove negligence (common law defenses are waived)
- All claims may be brought in to Federal Court and are against the insured (the employer/contractor) directly
- Any employer failing to secure DBA when required can be guilty of a misdemeanor and upon conviction thereof, punished by a fine of not more than $10,000, or by imprisonment for not more than a year, or both; and
- Where the employer is a corporation, the president, secretary and treasurer shall also be severally liable to such fine and imprisonment for the failure of the corporation, as well as severally personally liable jointly with such corporation for the failure to secure

## Unique Coverage Situations

- _Doctrine of Reasonable Recreation_
- Requires that an employee’s injury or death occurs arising out of or in the course of the employer’s furnished, funded or promoted recreational activities
- _Doctrine of Zone of Special Danger_
- Requires that an employee’s injury or death occurs arising out of or in the course of employment
- Where there exists unique conditions or circumstances in employment which place an employee in a “zone of danger” then an accident resulting in injury or death need not be strictly related to job duties
- Virtually 24-hour coverage in Iraq with some exceptions

## So you have a DBA exposure—What to do next...

- Contact your insurance broker
- Complete a DBA application that includes:
- Copy of contract award notification
- Description & Location of operations
- Headcount
- Payroll Information
- Historical Loss Information
- Details of transportation, lodging, security, etc.

**Notes:**
Consider Multiple Threats await you and your employees upon arrival in Iraq:

Weapon of choice in Iraq is called the IED (Improvised Explosive 
     Device) which can be dug into trenches the night before and then set off.

  Snipers and bandits are other threats facing contractors doing business in Iraq       -- while off base, contractors should wear flap jackets and never stroll!!!

  Kidnappings are becoming a major concern for both US and Third County
     Nationals. Plan Ahead.  Consider Kidnap & Ransom insurance.  Protect yourself      and your employees.
  As summer approaches – expect 130 degrees in the shade.       Protect you and your employees from all hazards – natural and      man-made.

## What Other Insurance Should One Consider?

_**Medical**__ _
_**Accident & Health**_
- Sickness & Accident coverage
- Accidental Death and Dismemberment (AD&D)
- Travel Accident
- Occupational Accident (for independent contractors)
- Medical Evacuation Coverage
_**Life**_** **(Group or individual protection)
_**War Risk Coverage**_ (written into some AD&D and Business Travel Accident policies) covers employees from a war or civil disturbance, typically excluded from accident and health policies; generally covers terrorism, nuclear, biological and chemical situations
_**Kidnap, Ransom & Extortion**_ - including Wrongful Detention and Hijacking where covered losses include Ransom Monies, consultant expenses and judgment as well as settlements and defense costs
_**General Liability (GL) and Third Party Liability (TPL) insurance**_
_**Property/Construction insurance**_ to cover your infrastructure projects including building construction, heavy civil works, utility and energy related facilities.

## How AIG can help 

-  Leading insurance and financial service    provider in the US and abroad offering a    wide range of insurance products to meet
-    your needs in Iraq and elsewhere in the world
-  130 offices worldwide with over 2,500    experienced and highly responsive claims professionals uniquely
-    stationed to serve you
-  40 claims local staff dedicated to serving the Middle East in:
-  Bahrain, Cyprus, UAE (Dubai), Egypt, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, and Turkey
-   Our DBA policies are broadened by Accidental Death &
-     Dismemberment, and Kidnap and Ransom coverage