Although DBA insurance is often characterized as being “just like traditional domestic workers compensation, only it happens overseas,” due to the specialist and international nature of this class of insurance it has several striking differences that present a significant challenge when trying to apply traditional workers compensation insurance principles to it. Below are some of the key differences between DBA insruance and US worker’s compensation:
- DBA Insurance lacks extensive data on losses as there is no centralized, extensive or long-term published data on workplace injuries compared to the US workers compensation insurance market. There are also significant differences in the risk associated between DBA insurance locations and the work involved.
- DBA insurance coverage extends beyond the workday and involves longer work hours in some cases the entirety, of the employee’s day, due to the “zone of special danger” doctrines and their expansion to include the “reasonable recreation” concept established by the courts, whereas domestic workers compensation only relates to on-the-job time periods with better known work hours and pace.The “zone of special danger” doctrine applies to DBA insurance claims in a war zone and are based on the premise that the test of recovery is not a causal relation between the nature of employment of the injured person and the accident. Nor is it necessary that the employee be engaged at the time of the injury in activity of benefit to his/her employer. All that is required is that the “obligation or condition” of employment create the “zone of special danger” out of which the injury arose. The “reasonable recreation” concept provides that employees working under the Defense Base Act far away from their families and friends, in remote places where recreational and social activities are severely limited, are in different circumstances from employees working at home. Personal social or recreational activities must be considered as incident to the overseas employment relationship.
- Locations that require DBA insurance coverage often lack adequate medical care due to the locations being in areas with little or no proximate access to adequate medical care. Severe injuries may require emergency medical evacuation away from the work location to other countries or in-country locations that may be a long distance for the site of injury.
- DBA insurance payout periods may be longer due to younger workforce compared to the US domestic workplace that has a broader mix of employee ages. Many DBA insurance locations require the workforce to be consciously screened for health and age. Hence the initial health of the employees tend to be better compared to US domestic workers, but payout periods for rehabilitation for full or partial disabilities may therefore be longer due to younger average age.
- DBA insurance payments involve multiple currencies and geographic locations, ranging from medical care at the point of accident, evacuations along with any locations in transit and finally disability payments back at the home country.
- DBA insurance claims adjudication and investigation involves a significant range of language, religious and cultural differences compared to US domestic workplace.
- DBA insurers may have to expend significant funds upfront for claims involving death or injury arising from war hazards before being fully (or in some cases partially) reimbursed by the DOL WHCA program. Preparing and presenting requests for WHCA reimbursement can involve significant additional time and effort. The time frame to reach final settlement of such claims can be as long as 7 years, and whilst there is no allowance for the value of money over time, DBA insurers are entitled to reimbursement of reasonable and necessary claims expenses associated with the handling of the DBA insurance claim. The DOL regulations divide reasonable and necessary claims into two types of expenses: allocated expenses (expenses such as attorney fees and court costs that can be itemized) and unallocated expenses (expenses that cannot be itemized). Under DOL regulations, carriers can claim up to 15 percent of the sum of the reimbursable payments made under dba insurance, as unallocated expenses.