Insurers refuse to pay out to soldier's widow

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The Independent Online

An American company contracted to provide life insurance to British soldiers serving in Iraq is refusing to accept liability for the death of a military police officer because it does not accept that he died in service.

Captain Ken Masters, who led investigations into allegations of abuse against British troops in Basra, took his own life in October 2005 after the pressures of his position became too much for him. The coroner who presided over his inquest has asked the MoD to improve systems to deal with the kind of psychological damage he suffered. But AIG, which by arrangement with the Army receives payments direct from soldiers' salaries, does not include psychological harm within its definition of "bodily injury" covered by its policy and has now told Captain Masters' widow, Alison, that she has no entitlement.

The company, whose record £56.5m sponsorship of Manchester United is part of its attempts to increase its European presence, informed Mrs Masters last July that she was entitled to a payout and asked her to spend £700 obtaining a grant of probate, detailing her husband's estate, ahead of it. But on 2 February - seven months after the initial correspondence - AIG informed her that she would not be paid after all. Instead, it is offering her a single ex-gratia payment of £2,500 to compensate her for the way it has handled the case.

"We note that we gave you the impression that we would pay the claim," AIG told her. "We also understand that you occurred accountants' fees. We appreciate that caused you unnecessary distress and inconvenience at such a sad time."

Soldiers heading to Iraq are encouraged by the Ministry of Defence to take out life insurance and AIG is contracted to provide it. The firm advertises heavily in The Soldier magazine and has a presence in offices at British Army bases including Lisburn, Northern Ireland, where Capt Masters was based before leaving for Iraq. Soldiers typically contribute up to £46 a month for cover, which pays about £150,000 to their dependants if they are killed and as much as £750,000 if they are injured and need lifelong nursing care.

The firm reportedly introduced new exclusions to its policy in 2003, removing insurance for "dirty bomb" attacks because the threat of a terrorist incident was considered so high.

Like most other soldiers, Capt Masters signed up to 10 units which would pay out £100,000 should he die in Iraq. But it has taken the firm until now to tell Mrs Masters that she will not be paid. The delays prompted her to request a copy of the terms and conditions of the initial policy in November and - after these failed to materialise - she requested a conversation with a manager at the firm, on 9 January. A manager did call her several days later but it was a further month before the terms and conditions arrived - with the letter which told her that AIG would not be paying out.

Mrs Masters fears her struggle to establish some financial security for her two daughters is one that other widows may be experiencing. "It's just been a fight this last year," she said. "I badly want to ensure that the widows who will inevitably come up behind me will not face more of the same."

Nearly 18 months after Capt Masters' death, Mrs Masters also still awaits the results of the Army's Board of Inquiry into the death, which was held last November. This heard how the decorated Special Investigation Branch officer had told two GPs, a psychiatric nurse and an Army padre of his mental state in the weeks before he was found hanged in his barrack room in Basra.

Mrs Masters has expressed a desire to discuss the mental effects of the conflict with the MoD. After asking for a meeting with the Defence Secretary, Des Browne, to discuss her concerns, she was told via her MP last July that the MoD had "experienced some difficulty in obtaining a date for a meeting." Mr Browne was asked for an alternative date - but no meeting has been held.

The MoD said yesterday that though AIG was contracted to provide insurance, Army personnel were not allowed to push soldiers into taking out the firm's policies. "That must be a soldier's decision. He must make the approach," said an MoD spokesman. AIG was unable to discuss the case.