It’s one of the priciest items on a contractor’s bill when doing business on the battlefield: insurance.
Calculations estimate that premiums range from $10 to $21 per $100 of salary paid to a civilian contractor, according to the investigative arm of Congress, the Government Accountability Office.
“That means taxpayers were paying up to $21,000 a year to insure a worker with an annual salary of $100,000, which is not unusual pay for a private contractor,” writes reporter Joseph Neff McClatchy Newspapers.
Neff’s story, Iraq Contracts Burden Taxpayers, lucidly explains how insurance companies may very well be making a financial killing in war.
Interestingly, insurance rates for a Pentagon contractor are higher than those paid by a contractor with the State Department — even when both are working in Iraq.
Neff explains:

The State Department has put its contractors’ insurance out for bid; the winning bid provides the insurance anywhere in the world at the same price. The U.S. Agency for International Development, the government’s foreign aid agency, also bids its insurance. The rates in Iraq are very good, said Sara Coyne, an insurance broker at Rutherfoord International, which manages the contractors’ insurance programs for the State Department and USAID.

All of this adds up to a lot of money when considering there are 100,000 or more contractors working in Iraq for the US government. That’s 10 times the number of the Gulf War.
Insurance is taking center stage in the lawsuit filed against the security company, Blackwater USA, by the families of four contractors whose mutilated bodies were burned and dragged through the streets of Fallujah in March 2004.

In seeking damages, the families contend that Blackwater sent the contractors on a dangerous mission without proper equipment or preparation. Blackwater, based in Moyock, N.C., has said the families are entitled only to the $1,073 weekly benefits paid under the contractors’ Defense Base Act policies.
The insurance industry agrees and has urged federal judges to dismiss the lawsuit and force insurance companies to pay the benefits. Any other decision will hurt the insurance industry and deprive the United States of the use of private contractors, AIG wrote in a friend-of-the-court brief. AIG didn’t cover Blackwater.