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The Defense Base Act (DBA) marketplace has become an increasingly tumultuous line of property and casualty insurance during the past several years. US troop draw downs in Iraq and Afghanistan have caused significant changes in contractor exposures in those areas. While there may be less need for contractors performing mission-critical work, a greater demand is developing for auxiliary services such as facilities management and security. With fewer troops comes less security for contractors, making DBA carriers nervous.


Defense Base Act-Infographic



The number of DBA claims has limited the number of carriers with appetite in this space. As an example: a large global insurer made significant, expanded DBA investments in the early 2000s and by 2013 had ceased writing coverage. Experienced underwriters and claims handlers have moved between carriers or left the market entirely.

“For contractors whose overriding motivation is simply to obtain work in the highly competitive government contracting arena, the market can be frustrating.”

For contractors whose overriding motivation is simply to obtain work in the highly competitive government contracting arena, the market can be frustrating.

It presents further challenges when contractors are required by government customers to present multiple DBA quotes during the bidding process.

There is no clear trend in market rates or underwriting appetite. Rates are highly dependent on who is doing what type of work and where. Some renewal rates may be flat or slightly increased if there is clean loss history and no high-risk exposure. Some contractors may see larger rate increases if payroll exposure is significantly down; others may have only a minimal rate increase even with large increases in payrolls. Security contractors and linguists are classes of business routinely declined by some insurers. The largest exposure areas remain Iraq, Afghanistan, and Central Africa (with some underwriter concerns on Ebola-related work there).

DBA premiums are typically reimbursable to the contractor by the letting agency. Therefore, it is very important when you submit a bid that your DBA premiums are as competitive as possible. Your firm could lose an award due to a large DBA rate/premium.


1. Have a broker that is well-versed in the DBA market and current trends . . . not trends from five years ago. Ask your broker: What DBA carriers are you approaching for my proposals and why? Are they the best fit for my operations?

2. Complete the application in its entirety and provide the statement of work (SOW). Provide the detail required for your broker to tell your story, especially when working in austere environments. The more detailed underwriting information you provide, the more competitive your DBA rates and proposal will be.

3. Provide an accurate payroll estimate. There is an expiration audit for all DBA policies to provide actual payrolls. Beware of 100 percent minimum earned premiums—they can be devastating financially if you lose a large contract mid-term and have not met the minimum earned premium. Also be aware of the impact of lowered payrolls on rate—there may be an inverse relationship.

4. If you have had DBA losses in the past, provide the narrative for claims in excess of $25,000 and an updated status for the underwriters reviewing your account. If you had war losses in Afghanistan and your current bid is for Guantanamo Bay, make sure your broker explains why that claim trend shouldn’t affect a proposal for work in Guantanamo Bay, as they are opposite ends of the rate and exposure spectrum.

“If you have employees in hostile areas, your broker should investigate war risk coverage.”

A holistic view of coverage on your employee assets is crucial. Your broker should assure integration of workers’ compensation (domestic and foreign voluntary), DBA, AD&D, business travel, and personal accident coverages. If you have employees in hostile areas, your broker should investigate war risk coverage. Implement pre-deployment and postloss strategies to mitigate loss impact. Broker analytics play an increasingly important role in helping differentiate your risk profile.

With a changing world and terrorist attacks becoming a regular occurrence, discuss how war risk exclusion and inclusions respond to incidents like the Brussels bombing of the airport and metros. Have a plan in the event one of your employees is outside the continental United States (OCONUS) when one of these attacks occurs. Note that DBA coverage responds to acts of war and terrorism regardless if the employee is working; business travel accident coverage could be an enhanced benefit.

Lockton has placed DBA insurance on behalf of our clients for more than 20 years and is well versed in realtime industry developments. We understand government contractors and can provide tailored solutions to support your mission and risk management goals.

Your broker can advise you on whether blanket DBA waivers are in place for any third-county nationals and local nationals hired on government contracts in certain areas. This is an area of caution for brokers and buyers. It is important that you understand what you are waiving for those third-country nationals and locals. Waivers can be confusing and costly for a contractor if not properly interpreted