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British troops face steep hike in personal injury insurance

05 November 2007
British soldiers using private insurance to top up their state injury allowance are to be faced with a sharp increase in the cost of their life insurance cover.

According to a Ministry of Defence document leaked to The Sunday Times, UK troops could have to pay out as much as £1000 extra in premiums and in some cases up to 160 percent more than they are currently paying.

Rising death and injury tolls in war torn Iraq and Afghanistan are behind the proposals which will see insurers nearly trebling some of the premiums they charge. Servicemen and women will now have to cough up for the extra cover under a private scheme that provides for their families if they are killed or wounded in action.

The insurance scheme known as Pax has been run by insurance giant AIG Europe (UK) since 1989 and is officially recommended to soldiers before they are sent to war.

However, in the document the MoD states that AIG has suffered "substantial losses...owing to the present level of combat injuries and deaths" which has been blamed on the increase in premiums on the high casualty rate in Afghanistan and Iraq, coupled with the rise in claims and payouts which has apparently used up the scheme’s profits.

To date, around 58,000 military personnel have taken out private insurance under the Pax scheme and many are also are encouraged to take out insurance on their kit which can cost up to £270 per year for £5,000 worth of equipment.

Only last month the Defence Secretary, Des Browne, announced a forthcoming shake-up in the scheme to ensure that personnel who suffered multiple wounds would be assessed for each individual injury. Previously, compensation has been calculated by the three worst injuries sustained.

While this sounds like good news for wounded soldiers, the reality is that the maximum payout remains woefully inadequate at a mere £285,000, although injured soldiers discharged from the Armed Forces also receive a pension based on their length of service.

Since the start of the war, more than 300 service personnel have been seriously injured in Iraq and Afghanistan.

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