BRITISH soldiers going to war are to be charged private insurance premiums of up to £1,000 to make up for inadequate government compensation for death or injury.

The effective doubling of premiums is revealed in a leaked Ministry of Defence (MoD) document. The insurance scheme, known as Pax, is run by AIG, the insurance giant, and is officially recommended to soldiers before they go to the battlefield.

In the document, the MoD blames the increase in premiums on the high casualty rate in Afghanistan and Iraq. They say that a surge in payouts has wiped out the scheme’s profits.

The MoD’s own compensation scheme is limited. A soldier who loses the sight of an eye receives only £28,750 from the MoD – but those with full private insurance get £150,000. The MoD pays £115,000 for the loss of a leg or an arm, but those on Pax receive £300,000.

Liam Fox, shadow defence secretary, said the hike in rates represented a breach of the covenant between soldiers and the country: “They are being asked to put their lives at risk, to ask them to pay to do it is an insult.” One lieutenant-colonel, who asked not to be named, said: “Young soldiers on little more than a grand a month after tax are having to buy insurance simply because the compensation that the MoD provides is so inadequate.”

Another officer said soldiers even have to insure their kit through Pax. “It is absolutely disgraceful that if a soldier loses a piece of his kit in theatre, he is charged for it and then has to claim the money back on insurance,” he said.

A total of 252 servicemen and women have died in Iraq or Afghanistan since 2001 and at least 561 have been wounded in action. Some 47 have suffered the loss or use of limbs or eyes.

Last month the armed forces compensation scheme was revamped after criticism that it was unfair. But in a letter written four days later, on October 15, the MoD effectively admitted that it remained inadequate.

Brigadier J H Gordon, the army’s director of personal services, wrote: “It is a command responsibility to ensure that our officers and soldiers are made aware of the need to provide adequately for their dependants.

“We need to remind our personnel of the various insurance products . . . and of the differences between these schemes and initiatives such as the armed forces compensation scheme.”

Nearly 58,000 members of the armed forces, a third of Britain’s troops, have taken out insurance with Pax.

Gordon warned that soldiers and officers face a double hit. Instead of taking out a policy to cover the six-month period of a typical tour of duty, they will have to pay for a minimum of 12 months. Monthly premiums will also rise by at least 30%.

A single soldier buying the maximum personal accident and life insurance would pay £279 for a six-month deal at present. The 30% increase would take it to nearly £363 for six months, but a minimum 12-month period would increase the cost to £725, a rise of 160%.

The increases would take the maximum payment for soldiers with family plans to £972 a year, Gordon said.

In the letter, he wrote that AIG had suffered “substantial losses . . . owing to the present level of combat injuries and deaths”.

Payouts to troops who had been wounded and to the families of those killed meant that “losses over the past year exceed the cumulative profits [on Pax cover] of the previous 10 years”.

Doug Young, chairman of the British Armed Forces Federation, said: “It’s too much for servicemen and women to have to pay . . . just for the privilege of going on an operational tour.”

The forces compensation scheme was revamped last month to ensure that soldiers with serious disabilities received the maximum payment of £285,000. The MoD acted in the face of public anger at the disclosure that Lance Bombardier Ben Parkinson, who lost both legs when his Land Rover ran over a mine in Afghanistan, was offered just £152,150, little more than half the maximum payout and less than a third of the £484,000 awarded by the courts to an RAF data input clerk who suffered repetitive strain injury to her thumb.

This weekend MoD officials said privately they were negotiating with AIG to drop the 12-month contract. But the 30% increase was seen as inevitable. AIG declined to comment.

Read Mick Smith's defence blog at www.timesonline.co.uk/micksmith

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