Willis Gearing Up To Cover Contractors In Iraq

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By Daniel Hays

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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 forreconstruction projects there, according to an internationalbrokerage firm executive.

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David G. Turner, Willis chief executive for London-based WillisConstruction Risks, said very preliminary discussions to locate inmarkets for the risks had so far not been met with any outrightrejections.

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"We're not aware of any markets not willing to considerpropositions with respect to work in Iraq," said Mr. Turner whoadded that "different markets have identified different levels ofappetite and enthusiasm."

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

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

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

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"Some clients are asking what would be available from thecommercial insurance markets," Mr. Willis explained, adding thathis company believes fairly broad coverage would be obtainable "fornatural perils and manmade events."

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

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

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

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

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Generally, it states that "coverages will be third-partyliability insurance; automobile liability insurance; Defense BaseAct workers' compensation and Medevac insurance for employeesworking at the various in country sites and in neighboringcountries in accordance with USAID instructions; and first partyproperty insurance for subcontractor/supplier business personalproperty.

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

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

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

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

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

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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."

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

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