CNA International –
US Operations
2005 DBA/USACE Review
International
– U.S. Operations
USL&H - DBA Business
December 9, 2005
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CNA International –
US Operations
2005 DBA/USACE Review
DBA Definition
The U.S. Government requires that U.S. and foreign national employees
hired by contractors and subcontractors to work on international
government contracts be protected by Defense Base Act (DBA)
coverage, regardless of their assignment and/or location.
The DBA is a separate act that provides Workers Compensation
using the benefit level of Longshore and Harbor Workers’
Compensation Act which provides disability compensation and
medical benefits to employees and death benefits to eligible
survivors. DBA claims require that:
The injuries arise in the course of employment;
Medical treatment is by a licensed physician;
Medical bills and records must be submitted in support of the claim.
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CNA International –
US Operations
2005 DBA/USACE Review
DBA Definition
History of Act:
• Passed August 16, 1941
• Originally intended to cover WC for persons employed at military installations
outside the United states
• Subsequently amended over the years to provide cover for employee working
outside the United States on a government contract
• Covers all employees regardless of nationality and includes all sub-contractors
• Can apply for and receive waivers for certain foreign nationals
– Department of Labor has sole jurisdiction
– Must provide alternate cover equal to act (no war exclusion)
– Will never waive for U.S. Nationals, U.S. legal residents (green cards) or
employees physically hired in the U.S.
• Benefits follow those of USL&H
• Cannot charge for War Hazard
– Government self - insures
• Limited numbers of companies write cover
• Open rating
• Under some circumstances a special license may be required from OFAC
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CNA International –
US Operations
2005 DBA/USACE Review
DBA - Background
DBA claims are reported to the Dept. of Labor, but do not get
reimbursed to us unless they qualify as war hazard claims.
War Hazard claims are DBA claims involving injuries sustained
as a result of a hostile or terrorist act.
War Hazard claims are reimbursed to us by the Dept. of Labor
providing we file the appropriate forms and submit the required
documentation (medical bills/records).
Dept. of Labor has established a special DBA War Hazard Claims
office in Cleveland, OH to expedite the processing of these
claims and the potential reimbursement of each submitted
eligible claim.
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CNA International –
US Operations
2005 DBA/USACE Review
DBA - Background
War Hazards Compensation Act
• Passed December 2, 1942
• Government self insures
– Department of Labor – office in Cleveland
• Recoveries must follow specific requirements
• Maximum Medical Improvement (MMI)
• Death
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CNA International –
US Operations
2005 DBA/USACE Review
DBA - Background
Special provisions:
• A waiver of this cover for local and third country nationals is available upon
application to the Department of Labor. Such waivers are routinely granted
subject to the following:
–1. No waiver is granted for U.S. citizens, no matter where hired.
–2. No waiver is granted for U.S. legal residents (green card holders), no
matter where hired.
–3. No waiver is granted for anyone of any nationality who is physically
hired in the United States.
• When waivers are granted, they are always subject to the proviso that the
contractor provides a WC programs with benefits equal to local laws. In the
case of Iraq and Afghanistan, since no local laws exist, locals are subject to
DBA provisions. Since benefits are keyed to actual wages, rates for locals of
these countries are usually lower than charged for U.S. citizens. There are also
special provisions for handling claims involving locals and Third Country
Nationals. These provisions are favorable to the insuring company and allow
for special settlement procedures.
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CNA International –
US Operations
2005 DBA/USACE Review
DBA – What do we look for?
• We require an application for each risk.
• We require prior experience.
• We require Statement of Work (SOW) on
all but classified contracts.
• We can access WC exp. mod factor.
• We order D&B on U.S. contractors.
• If insuring a foreign based firm, we require
payment in advance before binding.
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CNA International –
US Operations
2005 DBA/USACE Review
Defense Base Act
DEFENSE BASE ACT BEST PRACTICES
•
All new accounts will have a completed application and a statement of work. The
application should be signed by the Insured if possible/practical. If application
shows that the nature of work is classified, the account should be referred to
Chicago for discussion and approval.
•
All DBA files will contain proper documentation of the logic or method used to
determine the price.
•
Where possible, all new and renewal accounts will have prior experience (loss
runs) in file, including domestic loss runs and foreign if any. 3 years experience is
minimum required. Interstate or intrastate modifications should be obtained.
•
All new and renewal accounts will have comments in the account summary
concerning prior loss experience including relevant domestic experience.
•
D&B information and/or other financial information is to be obtained on all
accounts and commented on the risk summary report.
•
Formal quote letters should be specific as to operations to be covered. Referral to
a specific contract by number or name is the preferred method.
•
All expiring policies will have a voluntary audit report completed and premium
adjustments done. Time frame for receipt of audit is 90 days after expiration or
renewal of an account. Underwriters/assistants will request voluntary audit at the
time of renewal using a specific form.
•
Under some circumstances, a special license from OFAC may be needed.
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CNA International –
US Operations
2005 DBA/USACE Review
Defense Base Act
Procedures for Non-Payment Cancellations
Cancellation for Non Payment
• Premium must be received by the date indicated on the cancellation notice
or the policy will be cancelled.
• If the premium is received on or before the date indicated on the
cancellation notice the policy will reinstated with no lapse in coverage.
• If the premium is received after the date indicated on the cancellation notice
the policy will not be reinstated. Instead a new policy will be put into effect
on the date the premium is received by the agent or broker.
Repeat offenders
• Those insured's who are continually late with payment and receive 2 or
more cancellation notices for non-payment will have to remit premium prior
to the issuance of a policy.
• The earliest date that a policy will be put in force is the date that the
premium is received by the agent or broker.
Outstanding premium
• No policies will be issued for insured's with any outstanding premiums due
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CNA International –
US Operations
2005 DBA/USACE Review
Defense Base Act
Why write USL&H foreign exposure vs. domestic
exposure?
 War Hazard related claims are reimbursable + 15% for expenses
 While benefit levels are similar, the actual exposure is not.
Generally, USL&H exposures bring to mind heavy labor in or around
shipyards and water. DBA covers all occupations, whether an office
worker in Germany or a truck driver in Egypt.
 Not as litigious as domestic WC
 Generally, the incentive to return to work is greater in DBA. Many
employees are at a greater wage or salary than they would be in
similar occupations in the USA and they are generally anxious to
return to work.
Why are we comfortable?
 Backed by the US Gov’t.
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