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Soldiers' insurance policies on the rise

By Channel 4 News

Updated on 17 August 2009

British soldiers have taken out more than 100,000 insurance polices to ensure they get proper compensation if they are injured in combat, Channel 4 News has learned.

British soldiers in Afghanistan (Getty)

Private settlements of up to £400,000 have been made to soldiers severely injured in Afghanistan and Iraq, Channel 4 News can reveal.

Firms offering the policies to soldiers have increased their premiums as the volume and severity of claims from injured military personnel has risen.

Details over the extent to which soldiers are paying for their own private insurance are revealed as the Ministry of Defence (MoD) undertakes a review of its own controversial Armed Forces Compensation Scheme (AFCS).

The scheme has been criticised for providing inadequate settlements for injured soldiers, and failing to take into account the long-term disabilities some personnel are left with.

Sir Richard Dannatt, the chief of general staff, told Channel 4 News today: "I think it is perfectly reasonable that people take out their own private insurance that supplements what the AFCS pays out.

"We encourage servicemen to take out private insurance, which is additional cash that they will get. Money can’t put back a leg but it can help - a combination of public and private money is a proper way to do it."

The biggest provider of private insurance to British soldiers is AIG UK, which runs what is known as the PAX scheme. Whilst it is a private scheme, it is one that the MoD recommends to its soldiers, and can be deducted directly from their wage packets.

Channel 4 News understands that AIG UK now provides cover for about 70,000 soldiers, a slight increase on the official total of 68,000 published by the firm in March.

Their premiums increased by 29 per cent in March, with the cost of one unit rising from £2.75 to £3.55.

The more units that a soldiers pays for, the higher the payout if they are injured. Under the AIG UK scheme, if a soldier pays for one unit of cover and suffers permanent paralysis of both arms and legs, they will receive a £100,000 settlement.

If they have paid for 15 units of cover - £53.25 a month – they would receive £750,000. Other insurance providers use similar systems.

Aside from AIG UK, there are three other main sources of insurance for troops: Abacus, Towergate, and Forces Financial.

Abacus told Channel 4 News it had sold about 19,000 policies to soldiers, and that last month it upped its premiums by 70p per month. While it would not disclose details of exact payout details, it said "payouts in recent years have been significant."

Towergate Wilsons told us that it now had around 15,000 military personnel signed up, a personal accident customer base it has built up from zero in the past few years, and which it expects to have grown again by the end of the year. It is also planning a modest 5 per cent increase in its premiums next month.

It too confirmed "a number of significant" settlements in the past 12 months.

Forces Financial would not release details of its total number of policy-holders, or premium amounts.

Soldiers are not restricted from holding numerous personal accident policies. The policies not only cover personnel in combat, but in their day-to-day lives back in the UK as well.

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