Welcome to our 2025 global market update for the mining industry which provides commentary on the sector’s key lines of insurance (Property, Casualty, Directors’ & Officers’ Liability, Political Violence and Kidnap & Ransom), and the development of Parametric solutions.
Increased insurer appetite and additional capacity have driven stability and in many cases, rate reductions and increased limits . We expect this trend to continue throughout 2025, with improved options available for buyers. Environmental, Social and Governance (ESG) items will continue to be important considerations for insurers when considering risk profiles. Companies who have good ESG practices in place will benefit from more favourable renewal results.
Property market
Overall, capacity within the mining Property insurance market remains stable, with a limited number of insurers entering, or withdrawing from, the market. We have seen increased appetite from general Property insurers to underwrite mining property risks.
Over the last 12 months Property insurance rates have been decreasing. This is demonstrated in graph 1 below which shows the average rate’s for general Property (re)insurance policies over time. Commercial market rates tend to mirror what we see in the reinsurance market, and both have been improving in recent quarters.
With rates likely to continue decreasing, we expect the mining property market to be a more favourable for buyers in 2025. This will be driven by the downward trends across the general property market. However, recent renewals suggest these reductions may be tempered compared to the general Property market due to poor results in the mining Property market. This is due to significant claims activity in the mining industry throughout 2022, 2023, and the first half of 2024. Key insurers in the sector have incurred heavy losses across their portfolios.
Weather related events are increasing in severity and insurers are focusing on how clients manage, and plan to respond to, potential heavy rain / flooding events. Presentation of latest business continuity plans together with overview of physical and procedural adaptations that have been made to mitigate these weather events will put buyers in a stronger position to maintain or increase required coverage.
Graph 2 below, which is taken from a Met Office report into the Global Impacts of Climate Change, highlights just how much of the world are experiencing significant increases in heavy precipitation.
At recent renewals, we have seen a reduced focus on the valuation of assets. With global inflation trends abating, and with organisations adopting more proactive approaches to valuations, insurers are more comfortable that insured amounts are correct.
However, with certain commodities seeing continued increases (e.g. Gold), insurers are continuing to scrutinise Business Interruption (BI) declarations. They may apply commodity price caps (typically 15% - 25%) and / or BI Volatility Clauses (10% - 15%). Consideration needs to be given to these at renewal to understand the potential impacts on indemnity payments in the event of a claim.
Tailing Storage Facilities (TSF’s) continue to remain an area of focus for insurers, and failure to evidence suitable management can lead to coverage limitations being imposed. Good information, including overviews of TSF’s, client’s approach to their management, and technical reports from independent third parties, are key to obtaining the broadest cover and adequate indemnity limits.
We are expecting increased information requests from insurers regarding Heap Leach Facilities (HLF’s) in light of significant losses that have occurred recently at sites of this nature - Victoria Gold (Yukon, Canada) in June ’24, after which the company was put into receivership, and Copler mine (Turkey) in Feb ’24 which resulted in nine fatalities.
Hot Works also continue to be a focus for insurers. As a result of loss incidents emanating from failures to adhere to or implement correct controls, insurers will scrutinise information provided for hot works procedures. This is also the case for critical spares and structural integrity plans.
Property rate changes
Graph 1
Heavy rainfall and flooding
Graph 2
Source: Met Office
Liability market
The liability market has remained stable over the last 12 months. More insurers have entered the market (Markel, Aviva, GIC, Everest and Swiss Re) and there is increased capacity available, which is driving competition. As a result, we are seeing more tier 1 mining companies buying larger limits in excess of USD 500m, which previously wasn’t always possible.
The graph below shows that Liability insurance rates have increased slightly over the year, albeit they remain below the peaks seen in 2021/22.
More insurers are hiring their own engineers to enable them to review tailings reports, as there is continued demand for these to be produced as part of the global initiative to push better standards of TSF management. There have been two large losses in the past year, and if they result in total loss limits this could impact the market. However, unless there are other significant losses, we expect the market to remain stable.
Mining itself is moving towards “the great alignment”, with increased focus on human rights, how sanctions are being obeyed and companies carbon emissions. We are expecting insurers to request more information around the performance of mining companies in these areas regarding these issues in this year’s renewal conversations.
There are an increased number of insurers who can write Thermal Coal risks, mainly for operations based in Australia, South Africa, and Indonesia. This is positive from a client perspective as it drives greater competition and in turn improved renewal terms.
Casualty rate changes
Directors’ & Officers’ Liability
There continues to be plentiful capacity for buyers to access within the Directors’ & Officers’ (D&O) market. Many new insurers have entered the space to take advantage of favourable rates, without having the burden of legacy claims. Nevertheless, D&O insurers’ risk appetite in the mining sector varies, depending on several internal and external factors. One that stands out is companies’ ESG disclosures.
D&O insurers are studying ESG disclosures very carefully and testing companies’ delivery plans for their commitments, as well as scrutinising the boards disclosures and communications. If set targets are not met it could potentially trigger an expensive lawsuit against the company by stakeholders and/or activists. With ESG-related claims on the rise, companies should go above and beyond to ensure their activities are fully understood by insurers. Listed companies are in the spotlight, as their ESG disclosures are usually mandatory (depending on the jurisdiction) with Boards held accountable for public statements made. This is attracting scrutiny from shareholders, analysts, and regulators as well as insurers.
To assess ESG-related risks, insurers are taking advantage of sector benchmarking assessments. These typically incorporate a combination of publicly available data, alongside questionnaires and data processed by internal analysts, often giving a result in the form of a numerical score. This score will provide an indication as to how a company is performing against others within their industry. Buyers should be aware of the monitoring that ESG rating agencies conduct and be prepared to provide comment or potentially submit additional information to insurers when appropriate. Some syndicates are focusing only on ESG-positive risks, selecting buyers with particularly high standards and a clean track-record in areas such as health and safety and pollution. A good ESG score may open additional capacity.
Tailings risks have been the main cause of D&O claims and are also subject to increased insurer scrutiny. The use of TSF’s has caused several catastrophic failures in recent years, creating a wide exposure for D&O insurers, who are now asking for greater access to information. Some are imposing tailings exclusions, sub-limiting cover, or refusing to quote risks with tailings activity. It is critical to follow a globally approved framework and to effectively communicate tailings risks. Buyers operating TSF need to have a strict governance plan in place that ensures effective implementation of the latest published guidance and best practice, as well as detailed documentation of measures to prevent failures.
Additional considerations:
Mining type: insurers may set their own standards with regards to ESG, potentially excluding certain types of mining – such as thermal coal, for example.
Geographical location: D&O insurers may feel less confident underwriting risks in regions where there is political instability or where the operations are at an early exploration stage. This was a particular focus during 2024 when many large democracies faced elections and potential regime change.
Financial performance: 2024 was a 13 year high for corporate insolvencies which usually leads to a rise in D&O claims. Insurers will scrutinise recent financial statements to make sure buyers are financially resilient. If there are any doubts, or if information is incomplete, insurers may request additional material. If any concerns remain this is likely to affect the outcome of the negotiations.
Stakeholder engagement: ideally, buyers will show evidence of good relationships, not only with shareholders, but also with other relevant stakeholders. Including regulators, governments, and local communities of the countries in which they operate.
Claims record: insurers will sift through the buyers’ claims history and look for evidence that risks which triggered a loss event in the past have been appropriately addressed.
Listing jurisdiction: for public companies, the listing jurisdiction can affect the risk exposure enormously, particularly where the class-action environment is more developed, such as in the US, Canada or Australia.
This graphic, taken from a report authored by Ernst & Young, details what the top 10 risks are in the mining industry for 2025. Environmental considerations continue to rank highly
Source: Ernst & Young
Political Violence
There continues to be a high number of Mining companies seeking Political Violence cover through the London Market. This is being driven by both the increased frequency of instances of social unrest, and the hesitance of local insurers to retain these risks within their treaties
This has been further compounded by the strategic decision, taken by many western domiciled mining companies, to diversify their global critical mineral supply chains through expansion in resource-rich regions such as Africa, Latin America, and South East Asia.
It is expected that this trend will continue, as there is significant opportunity for expansion of mining operations within these regions. For example, over half of available global cobalt reserves, a key component in electric vehicle manufacture, are situated in African countries.
There are increased geopolitical risks within these regions due to economic or political instability, military coups, and increased costs of living. This makes it more difficult for companies operating here to protect their workforce and physical assets.
Despite these challenges, there is increased appetite within the market, and underwriting approaches have improved over the last 6 – 12 months. This is due to two main factors:
- A relatively loss free underwriting year globally
- New capacity entering the market and driving competition.
There was an additional USD250m of capacity in the Political Violence market in 2024, which has meant that insurers have had to re-evaluate their underwriting strategies to retain clients and ensure their portfolio remains intact. This is of benefit to the buyer as they are likely to receive more attractive terms at policy renewal.
Kidnap & Ransom
The Kidnap and Ransom (K&R) market has remained relatively stable in 2024, with the majority of incidents that have been responded to, coming in the form of threats and extortions to Western domiciled organisations despite the ongoing events in the Middle East. However, with the continued global geopolitical instability, mining clients have witnessed an increased exposure to their personnel related risk.
In the mining industry, operational risk is part of the daily landscape. Many mining organisations have, or are seeking to expand their operations located in regions where political instability and organized crime are prevalent. In Sub-Saharan Africa, recent geopolitical developments have exacerbated this risk with increased insurgent activities in countries like Nigeria, Mali, South Sudan and the Democratic Republic of Congo. As such, the Special Crime market has seen a slight rise in claims across various perils but particularly malicious detentions, often being complicated and relatively drawn out.
Similarly, in parts of South America, including Colombia and Venezuela, criminal organizations have been looking to target businesses in remote regions whereby access to the local law enforcement may be more challenging. Criminals have been seen to be agnostic as to whether employees are local nationals or expatriates, with the latter making up 97% of global kidnaps in 2024. These criminals are increasingly viewing mining companies as lucrative targets for ransom and extortion due to the perception of wealth onsite.
Beyond financial protection, K&R insurance continues to provide immediate access to global crisis response consultants that are able to advise and help navigate events that are often highly emotive. With the increasing frequency of targeted attacks, we’re seeing more clients considering the implementation of K&R coverage or evaluating the effectiveness of existing programs.
2024 Kidnap, Ransom & Extortion Risk Map, created by SPS
Risk Rating Matrix The matrix rating guide considers the potential impact on organisations and/or individuals by means of kidnap, ransom, extortion and unlawful detention.
Source: SPS
Parametric Solutions
Extreme weather events such as floods and droughts, and natural catastrophes like tropical cyclones are major causes of disruption in the mining sector.
The environmental impact of such weather events can disrupt supply chains across different raw materials, mining sites and climatic zones. For example, flooding, following heavy rain or surges, can cause hazardous or toxic waste storage to spill and disrupt operations.
Claims arising from the mining industry are expected to increase in frequency and severity, and insurers are becoming more cautious in their underwriting approaches, particularly for tailings dams. Parametric insurance can offer an attractive alternative solution, filling the gaps in the traditional insurance programmes.
Parametric solutions are relatively new to the insurance market. The use of these products continues to increase as more products become available, and those already on the market continue to evolve.
They can help protect mining businesses against weather-related losses and the consequent non-damage business interruption. Parametric policies respond when pre-defined parameters (triggers) are met or exceeded. The client must suffer a financial loss due to a triggering event taking place but unlike traditional insurance, there is no need for loss adjusters to determine the loss and there are no exclusions for any assets or business interruption losses.
There have been some new insurer entrants into the market recently and new products are being launched all the time and are worth considering to potentially supplement and fill in gaps within buyers’ existing risk transfer programme.
This map, found within a Met Office report on the Global impacts of climate change, shows regions where multiple severe impacts may occur at similar times at 4°C of global warming above pre-industrial levels
Source: Met Office