Insurance companies alone have pocketed $600 million in excessive profits in Iraq

Insurance companies alone have pocketed $600 million in excessive profits
over the past five years, says a staff report from the House Oversight and
Government Reform Committee, but the Defense Department refuses to
adjust its approach for managing the program.

The Wars Come Home

A poorly run Pentagon program for providing workman's compensation for
civilian taxpayers, a House oversight committee said Thursday.

Insurance companies alone have pocketed $600 million in excessive profits
over the past five years, says a staff report from the House Oversight and
Government Reform Committee, but the Defense Department refuses to
adjust its approach for managing the program.

According to the committee, the Pentagon allows its contractors to
negotiate their own insurance contracts. By contrast, the State Department,
U.S. Agency for International Development and the Army Corps of Engineers
have all selected a single insurance carrier to provide the insurance at
fixed rates.

"What makes the situation even worse is the people this program is
supposed to benefit - the injured employees working for contractors -
have to fight the insurance companies to get their benefits,"
committee Chairman Henry Waxman, D-Calif., said at a hearing
Thursday. "Delays and denials in paying claims are the rule."

KBR Inc., one of the largest defense contractors in Iraq, paid the insurance
giant AIG $284 million for medical and disability coverage under the Defense
Base Act, a reference to the federal law mandating the insurance. Due to
the way KBR's contract is structured, this premium, along with an $8 million
markup for KBR, gets billed to the taxpayer.

"Out of this amount, just $73 million actually goes to injured contractors, and
AIG and KBR pocket over $100 million as profit," Waxman said.

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