Mining
Stable capacity with competitive pricing trends
The property mining insurance market is maintaining stable capacity with competitive pricing developments, depending on the specific region and the assets requiring protection. However, 2023 was not a profitable year for the main insurance providers to the mining industry, and insurers have faced some loss activity in H1 2024 as well. This has tempered a more competitive market dynamic as insurers have become more cautious in their underwriting approach
Changes in policy terms and conditions
Recent loss incidents have prompted some insurers to review their coverage and/or revise their policy language with regards to underground flood, man-made seismic events, as well as open pit flooding.
Underwriting changes
There have been no new underwriters entering the mining space since Inigo launched its offering in mid-2023. Underwriting teams have remained mostly unchanged in 2024. The head underwriter of mining and heavy industry at Canopius has recently resigned.
Notable claims
Insurers are facing claims from a variety of causes with no identifiable trends. The main causes of losses include fires from hot works, machinery breakdown, as well as floods and heavy rain. Longer than expected lead times for the replacement of critical machinery have led to increased business interruption exposure to markets. Furthermore, higher prices for some commodities such as gold and price volatility for others, such as lithium, have led underwriters to focus on reviewing business interruption declarations. Some are considering the imposition of commodity price caps to coverage.
Geographic/sector differences
Canada is currently a very competitive insurance market for mining risks. Despite regional variations the insurance market in the rest of the world is reasonably stable.
New solutions
We have successfully placed parametric solutions to cover gaps in the traditional insurance offering or where there is limited capacity/limits available. Alternative options may be particularly attractive for the protection of pit walls and tailings storage facilities.
Longer than expected lead times for the replacement of critical machinery have led to increased business interruption exposure to markets.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
Some territories, such as Canada, are more competitive on pricing with reductions the norm, while most territories across the rest of the world are more stable.
Expected capacity change in the next 6 months for claims-free portfolios
We will potentially see on or two new entrants to the London Market but overall, the market is likely to remain broadly stable with little change in the overall market dynamics.
Expected coverage change in the next 6 months for claims-free portfolios
Some insurers are likely to implement coverage restrictions following claims incidents similar to the ones described above.
The property mining insurance market is maintaining stable capacity with competitive pricing developments, depending on the specific region and the assets requiring protection.
Emerging risks
For mining businesses with well-developed risk management programmes, external risk control/survey/engineering site reviews, there should not be any surprises in form of emerging risks in the foreseeable future. ESG considerations and Tailings Dam Management continue to be at the forefront of lead Insurers’ new risk selection. Smaller enterprises will often need additional guidance and support from their broker to navigate these challenges, prior to presenting their risk to the market.
Additionally, climate change has increasing relevance for mining companies and investors, particularly when it involves water intensive processes.
Renewal recommendations
Mining companies are advised to prepare well ahead of renewal and provide full detailed submission with supporting information for underwriters’ review. If possible, insurance buyers should also conduct a renewal roadshow to meet underwriters face to face to and tell your own story. Alternatively, updating markets via virtual sessions can also work in your favour.
For further information, please visit the Lockton Mining page, or contact:
Richard Fenton
Head of London Mining Broking Team
E. richard.fenton@lockton.com
