Willis Gearing Up To Cover Contractors In Iraq

By Daniel Hays

NU Online News Service, June 5, 11:20 a.m. EDT?Even though bullets continue to fly over Baghdad, insurers are expressing interest in providing coverage for reconstruction projects there, according to an international brokerage firm executive.

David G. Turner, Willis chief executive for London-based Willis Construction Risks, said very preliminary discussions to locate in markets for the risks had so far not been met with any outright rejections.

"We're not aware of any markets not willing to consider propositions with respect to work in Iraq," said Mr. Turner who added that "different markets have identified different levels of appetite and enthusiasm."

Mr. Turner said at this point "most of the contact we've had has been from construction companies and project developers who will go in and build."

The developers, he said, were expected to include international oil companies "who will go in and help the Iraqis expand and modernize their operations."

Willis, Mr. Turner said "has not affected any coverage at the current time . We've had some very preliminary discussions with clients and the markets."

"Some clients are asking what would be available from the commercial insurance markets," Mr. Willis explained, adding that his company believes fairly broad coverage would be obtainable "for natural perils and manmade events."

There may be issues, he explained, related to risks from "malicious damage, riots and civil commotion and that sort of social upheaval and some issues related to unexploded munitions of war still littering the country."

The first reconstruction contract was awarded by the U.S. Agency for International Development in April after President Bush authorized AID to provide federal indemnification of such work.

That contract went to San Francisco's Bechtel Corp. for $34 million. Mr. Turner said Willis believes there are some exposures for contractors, which the government will not be indemnifying.

A spokesperson for Bechtel referred a reporter to a section of the company's Web site that deals with Iraq insurance for subcontractors and suppliers. The site notes that types and levels of insurance will vary based on the scope of work and services.

Generally, it states that "coverages will be third-party liability insurance; automobile liability insurance; Defense Base Act workers' compensation and Medevac insurance for employees working at the various in country sites and in neighboring countries in accordance with USAID instructions; and first party property insurance for subcontractor/supplier business personal property.

The indemnified project in Iraq has the possibility of involving up to $680 million of work. Stephen Naventi, a spokesperson for Bechtel National Inc., said in an e-mail that "as a general policy, we do not discuss project specifics such as the insurance we are using."

USAID said the company has been at work for them since April, but did not immediately provide details as to what the indemnification agreement covered.

Meanwhile at Willis, Mr. Turner said that at this stage, "contracting clients are negotiating the scope of their work, the details of their contracts and the details of the indemnities. So we have to wait till all those negotiations conclude until we can put something into place," he said.

He said, two weeks ago, Bechtel had a meeting with subcontractors to discuss work.

Mr. Naventi said the data for subcontractor insurance requirements is at http://www.bechtel.com/pdf/IraqInsurance.pdf.

The discussions between Willis and contractors, Mr. Turner said, have not yet not dealt with maximum limits or deductions, but it "will clearly vary from contractor to contractor."

"This is new territory for everybody," remarked Mr. Turner. Willis, he said envisions providing coverage using a "combination of European and North American capacity."

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Willis Gearing Up To Cover Contractors In Iraq

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