DBA Insurance is an essential part of any overseas operation. It is required by legislative mandate (Defense Base Act) and considered central to government/defense contractor business risk management. Mistakenly seen by some as operational overhead cutting into profits, Defense Base Act insurance provides business leaders with the confidence to enter foreign contracting opportunities enhancing the scope of profitable business opportunities. Provided below are 6 essential points in obtaining DBA Insurance.
The intent of Defense Base Act Insurance
The intent of DBA insurance is to protect the workers participating in US Government contracts overseas. It covers employees from the financial loss of physical harm and associated consequences (Loss Wages, Medical Treatment). Furthermore, DBA insurance allows third-country nationals and local employees (in-country) to participate in the workforce with additional expertise and variable income levels that can be far less than a US National. Many contracts require local employees to participate in public work projects, for instance, Afghanistan. DBA Insurance has 6 essential points required by insurance carriers.
Greater confidence is a positive result of Defense Base Act Insurance
Defense Base Act Insurance enhances the confidence of corporate leadership by maintaining the financial well being of both your company and your workforce. The focus on operation and mission quality takes center stage while minimizing financial loss. The cost of insurance must be accurately determined in the proposal development stage.
3 aspects of financial predictability related to acquiring DBA insurance
- Minimum premium(s)
- Payroll-based premium(s)
- Slot-rate premium(s)
Minimum premiums, ranging from $5,000 to $10,000 are determined by the insurance company. Additional payroll reported during the insurance policy period is added without additional premium until it is maximized.
Premiums for operations with higher payroll figures are more expensive. Other factors that contribute to the premium determination is the type of work, country of operation, and loss history.
Payroll-based premium is the standard method to determine premium levels. Payroll per $100, is multiplied by the insurance rate(s). The payroll percentage is determined. Payroll is 1 of the 6 essential points required to obtain DBA Insurance. Accurate payroll amounts translate into better underwriting results, minimizing audit adjustments and premium changes.
Slot-rate premiums are determined by underwriting guidelines when a significant amount of payroll is associated with a contract value. Payrolls in the millions of dollars are applied against a pre-determined rate to simplify the underwriting process and DBA administration on behalf of your company. Using the rule of large numbers, the underwriting criteria and rates set by the insurance company reflect a rate commensurate with operational exposures and claims history.
Obtaining Defense Base Act insurance is simple. Visit theriskrecon.com/dba for more information.
6 essential points required for Defense Base Act insurance
- Contract Number – critical as the policy tracks directly with the insurance policy
- Worker count by occupation, country, classification (US National, Third Country National, or Local)
- Payroll or contract value
- Country of work
- A thorough operational description
- Details on transportation, housing, and security
Each essential point is outlined in the Defense Base Act insurance application. It is important to work with a skilled, experienced insurance professional that understands the various aspects related to coverage limitations and claims management of Defense Base Act Insurance. Using the wrong insurance agent/broker will cost you in time, money, and resources if unfamiliar with the coverage.