Excavating value in a soft market
The property damage and business interruption (PDBI) insurance market for mining has softened in the past 12 months.
Competition to write mining business is fierce.
Due to the volatile nature of losses in the industry, mining risks have historically come with healthy premiums for insurers, making the sector an attractive for insurers chasing top-line growth.
We assess the global capacity for any one mining risk to be in the region of $1.5 billion, an increase on our assessment last year.
An influx of reinsurance capital (across both risk and catastrophe cover) sets the backdrop for the healthy capacity available across both specialist and non-specialist mining insurers. For the specialist mining market, there’s been a slight uptick in capacity and coverage for key mining-specific exposures such as tailings and underground.
Raising questions about sustainability.
“A significant market loss could have wide-reaching repercussions and see a sharp increase in rates and tightening of terms.”
Will Fremlin-Key | Global Mining & Metals Leader, Willis Natural Resources
“Undoubtedly it is a good time to be a buyer of insurance, however, we encourage all insureds to consider the cyclicality of the insurance market – the components for a potentially aggressive correction are being assembled now. A significant market loss could have wide-reaching repercussions and see a sharp increase in rates and tightening of terms” Will Fremlin-Key, Global Mining & Metals Leader, Willis Natural Resources.
Despite the absence of major loss events in the last year, attritional claims from natural catastrophe (nat cat) or weather-related incidents have eroded specialist markets’ profitability, but generally carriers are still in the black. Nevertheless “some of the technical mining markets have reached walk-away points in terms of rate or rate reduction, and been prepared to lose renewals” Anna Lyakhovskaya, Mining & Metals Broker, Willis Natural Resources.
Getting the balance right will serve mining companies well in the medium- to long-term.
Conditions: In a soft market, nothing is off the table.
Coverage has become the trade-off.
Insurers that are keen to maintain and build their market share are demonstrating increased flexibility to consider placements that have been historically more challenging.
Where one insurer breaks rank, it can make it difficult for other carriers to hold firm on conditions in an environment where underwriters are chasing premium.
“There’s opportunity here. The pendulum has swung in buyers’ favor after years of hard market challenges and now is the time to open up negotiations on coverage for challenging exposures.”
Freddie Fife | Associate Director, Mining & Metals, Willis Natural Resources
There’s opportunity here. The pendulum has swung in buyers’ favor after years of hard market challenges and now is the time to open up negotiations on coverage for challenging exposures.” Freddie Fife, Associate Director, Mining & Metals, Willis Natural Resources.
When pricing has hit the floor and conditions are broadening, there’s one lever left in insurers’ arsenal: deductibles. Despite the positive commodity profile for many metals and minerals, the market is reaching a point where insurers need to flex deductibles to attract and retain business. In a soft market, nothing is off the table.
Underwriters are restricting cover around mining-induced seismicity.
Following the 2024 Çöpler mine (Turkey) and Eagle Gold (Canada) leach pad failures, underwriters refocused their efforts to delineate the breadth of cover they are willing to provide.
Various carriers introduced leach pad exclusion clauses and increased their underwriting due diligence of the geotechnical, design and management of these assets. The level of information required to underwrite these risks now closely aligns with that required by insurers to consider tailings exposures.
Underwriters are scrutinizing tailings management practices.
Many mining companies have either committed to adopting the Global Industry Standard on Tailings Management (GISTM) or are on a pathway to adoption. Any miner that has not committed to conformance with the standards is experiencing greater underwriting scrutiny on tailings management.
01
Mining companies are facing a steep demand curve, but project approval timelines are not always keeping pace. Risk managers are tasked with building certainty amid complexity.
02
While the international liability market for mining remains technical, market conditions over the past 12 months have been increasingly favorable.
03
Geotechnical exposures are impacting risk profiles as mining companies are embarking on projects in more remote locations and challenging jurisdictions.
04
Softening conditions are extending across six key hotspots: South Africa, Latin America, North America, Canada, Asia, Australia & Pacific.
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| Title | File Type | File Size |
|---|---|---|
| Mining Risk Review 2025 | 12.7 MB |
