Workers' comp for Iraq contractors estimated in millions

The government is covering claims for contractors injured in Iraq.
WASHINGTON (AP) -- Almost half of all injury and death claims filed by U.S. contractors so far this year were for situations that occurred in Iraq.
The federal government ultimately will spend millions of dollars for these workers' compensation payments.
Federal law requires all U.S. government contractors and subcontractors to obtain workers' compensation insurance for civilian employees who work overseas. If an injury or death claim is related to a "war-risk hazard," the War Hazards Compensation Act provides for government reimbursement to insurance carriers.
Of the 771 injury claims filed by U.S. contractors so far this year, 345 occurred in Iraq. Of the 66 deaths reported as of last week, all but nine occurred in Iraq, according to the Labor Department.
Since January 2003, there have been claims for 476 injuries and 80 deaths in Iraq.
"The security situation is virtually unprecedented," said Bob Hartwig, chief economist with the Insurance Information Institute, an industry group. "You've got the potential to be kidnapped, to be killed, to be tortured, shot at, blown up."
Overall costs
Labor Department officials said they had no cost estimate for reimbursements of Iraq-related claims, but given the maximum payment of $1,030.78 per week and the number of injuries and deaths, it could well climb into the multimillions. In past years, annual reimbursement costs under the War Hazards Act have ranged from $1 million to $2 million.
The Employees Compensation Fund, which pays war-hazard claims as well as workers' comp claims for federal employees, is allocated about $2.3 billion annually, according to the Labor Department.
Coverage for employees of U.S. contractors, regardless of citizenship, is required under the 1941 Defense Base Act, just as workers in the United States must have workers' compensation insurance. Military personnel are not eligible and have a separate program.
Insurers are not required to provide coverage under that act, so as an enticement, the government promises reimbursement to carriers for war-related claims.
"The rebuilding of Iraq and other areas around the world would be more difficult without these laws because insurance premiums would rise dramatically, causing some contractors not to take on jobs in challenging and faraway locations and raising the overall cost of the rebuilding effort," Labor Department spokesman Ed Frank said.
But escalating claims are creating concerns for insurers despite the promise of government reimbursement, mainly because it can take the government months to investigate the claims and pay the insurer. In the interim, insurers are responsible for paying the claims, creating cash-flow problems even though they get to keep the premiums.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.