Daily Insurance Industry News
Daily Insurance Industry News
Friday 23rd of March 2018
February 8, 2012

Mining insurance capacity down 30%

by Gill Montia

Story link: Mining insurance capacity down 30%

In 2011, the mining insurance market was hit by $2.7 billion in natural catastrophe losses and over 60 operational losses, totaling $835 million.

According to a new report from Willis, the $3.5 billion estimated losses facing mining insurers has resulted in a 30% withdrawal in insurance capacity since the start of 2011.

The report estimates current global capacity available to mining Property Damage & Business Interruption (PDBI) insurance programmes at $1.25 billion, down from $1.75 billion at the beginning of last year.

Willis says: “Whilst this does not represent the dramatic loss of capacity that precipitated historical hard markets such as 2001, it may indicate a difficult year ahead for the renewal of mining PDBI programmes”.

The broker identifies resource nationalism, natural catastrophe exposure and supply chain disruption and globalisation as the three biggest risks facing mining companies.

The firm also notes that resource nationalism and punitive taxation regimes are no longer only an issue in emerging markets, with developed countries such as the US, Australia and Canada increasingly adopting resource nationalist policies that include the blocking of Chinese investments and the tightening of fiscal regimes.

At the same time, the Japanese earthquake and tsunami, the Christchurch earthquakes, the Queensland floods, earthquakes in Papua New Guinea and weather events and floods in Brazil and South Africa have all served to reinforce the threat to the mining sector posed by natural catastrophe events.

However, Andrew Wheeler, Willis’ mining practice leader, comments: “Even though the insurance market is still reeling from the unprecedented spate of losses in 2011, well risk-managed mining programmes will still be able to get favourable terms and conditions this year if they can demonstrate: a clear understanding and ability to mitigate the effects of CBI exposures, a pro-active approach to minimising the effect of weather-related events to their operations, and that sound risk engineering and innovative risk avoidance measures form an integral and core part of their business.”


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