Clements Worldwide Cautions Contractors about New Procurement Process for DBA Insurance

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The program’s transition to open market dramatically impacts the way in which government Contractors and subcontractors obtain critical DBA insurance.

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Clements Worldwide, leading provider of international insurance solutions, reports the U.S. State Department’s pre-negotiated agreement with insurer CNA for the provision of Defense Base Act (DBA) coverage has expired. As a result, all DBA policies with renewal dates of July 22, 2012 or later must be placed on an open market basis. Consequently, contractors may be subject to:

  •      Higher rates:

     o Minimum premiums now apply, which could be significantly more expensive for
         contractors with operations in Iraq or Afghanistan.

  •      More complex procurement:

     o Brokers must now present risk in order to obtain quotes.
     o Insurers will now require claims experience information in order to rate individual
         accounts.

  •      Varying limits:

     o Although basic coverage will remain the same, certain extensions (such as evacuation)
         may have varying limits depending on the insurer.

“Failure to obtain DBA insurance for all covered employees not only subjects an organization to the risk of potential lawsuits by its employees, it also exposes the company and its officers individually to possible Labor Department fines and criminal actions,” says Smita Malik, assistant vice president at Clements. “DBA cover is therefore not only an important requirement of any robust compliance program, but also an important step in mitigating potential liability arising from covered employee activities.”

Malik urges all U .S. government contractors and subcontractors to promptly consult with an authorized DBA insurance expert to ensure proper compliance with the State Department’s new requirements.

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About Clements Worldwide
Clements Worldwide works with authorized DBA insurers and is a leading insurance provider for expatriates and international organizations. Founded in 1947, Clements offers international car, property, term life, health, specialty and high risk insurance in over 170 countries. With offices in Washington, DC and London, Clements delivers comprehensive coverage, superior customer service, and unparalleled claims response. To learn more and quote online, please visit http://www.clements.com.

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Katie Bengaard
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