Congressional investigators calculated last year that insurance companies had collected $1.5 billion in premiums. They estimated that the companies would spend about $900 million in compensation and expenses -- leaving a profit of about $600 million.
Insurance officials said the high premiums they charged in the early years of the conflicts reflected uncertainty over the risks of insuring employees in a war zone and on such a large scale.
War zone insurance is unlike any other kind of coverage. Once U.S. military involvement in Iraq and Afghanistan ends, the insurers will lack a reliable stream of future premiums to cover the costs of past claims, some of which will require decades of compensation. Thus, the insurers say, they had to charge more up front.
Premiums have declined as underwriters have gained a better understanding of the risks, industry officials noted. Today, companies operating in Iraq and Afghanistan are paying 3% to 17% of their payrolls for insurance -- above historical norms but below the premiums charged initially.
"You don't know when starting out whether the rates are adequate or inadequate. How the hell do you know?" Greenberg said. "We charged what we needed to cover the risk."
'Lack of compliance'
The U.S. Labor Department, which oversees the insurance program for civilian contractors, has struggled to handle a greatly increased workload without adding staff or boosting funding.
The department has fined only a handful of companies, despite indications that scores of worker injuries and deaths have gone unreported in Afghanistan and Iraq. Nor has the department pursued criminal sanctions for companies that failed to obtain workers' compensation insurance, as required by law.
Russell Skoug of Diboll, Texas, who lost part of his leg in a roadside bomb explosion, has had to delay surgery while he fights his employer, Wolfpack Security and Logistics, for compensation. The company failed to purchase the mandatory insurance before Skoug was maimed.
"It's agonizing," said Skoug, a mechanic who repaired air conditioners in Iraq.
Wolfpack President Mark Atwood said he had not known about the insurance requirement. "People coming over there should understand they're not walking down a rose garden," he said. "Don't go crying foul when you've injured yourself."
The company, now out of business, paid some of Skoug's bills after losing a court battle.
Shelby Hallmark, the Labor Department official overseeing the civilian insurance program, said there had been a "complete lack of compliance" in the early days of the conflicts in Iraq and Afghanistan.
Asked why the government has not sought criminal penalties against companies that neglected to purchase war zone insurance, Labor officials said in a statement that they considered referring one such case to the Justice Department, but did not. In the past, Justice has shown a reluctance to prosecute such cases, which are misdemeanors.
"It's not an enforcement kind of program. Enforcement is not the function," Hallmark said.
The department also relies on companies to keep employees informed of insurance benefits available to war zone workers.
Yet Rita Richardson had no idea that she was eligible for compensation after her husband, Rod, was killed by a roadside blast in Iraq while working as a contractor for Falcon Security.
After advice from friends of the former Marine Corps lieutenant colonel, Rita spent a year squabbling with the Labor Department and ACE, the insurer, to receive benefits.