MINING INSURANCE
Risky business
Vale, following a series of tailings dam failures,
has committed to investing in dry processing
technologies (credit: Vale)
before, in 2018, rising to 2.5-7.5% on average,
according to Pryor.
“In 2019, the trend has continued with a
number of new claims having been reported
with rate increases of plus-10% on some
accounts,” he said.
Risk on
Tailings dam accidents, climate change con cerns and miners’
social licence to operate are all on the mining insurance
company radar, as Dan Gleeson finds out
he mining sector has, in recent years, lost
its ‘no claims bonus’. Tailings dam
accidents, pit wall failures, floods, rock
collapses, fires and earthquakes, combined,
have seen insurance providers amend their
terms, ask for more data and, in some cases,
withdraw from markets.
This shift has been exacerbated by several
natural catastrophe claims across sectors in the
last few years, which has seen insurance
underwriters take a much more cautious
approach to writing cover.
Yet from 2011 up until the start of 2017, the
mining insurance sector had been reasonably
quiet, with premiums flat or falling and the
amount of claims, generally, being outweighed
by the premiums received.
“If we were looking at the five years leading
up to 2017, the insurance market for mining got
progressively softer – from about 2011-2017,
rates came down every year largely as a result
of there being few significant claims and
losses,” Paul Pryor, Global Mining Practice
Leader at Aon, told IM.
“Insurers were making money, so there was
quite a lot of capacity out there with
underwriters entering the mining sector
because of the potential profitability,” he said.
This changed in 2017 and 2018, with two
years of bad loss runs in mining, specifically,
according to Pryor, with some $900 million to $1
billion of property claims in 2017 and over $1
billion in 2018.
“In addition to that, 2017 was one of the
worst years on record for natural catastrophe
claims,” he said, explaining that claims tied to
these insured risks amounted to some $145
billion.
In 2017, rates stopped falling and levelled out
T
14 International Mining | NOVEMBER 2019
While it’s easy to finger the high-profile tailings
dam disasters in North and South America for
these rate increases, the period from 2017-2019
has seen a wide variety of relatively costly
claims from the sector (see table).
This emphasises the ‘risky’ and unexpected
nature of mining – traits that can cause
problems for the mining insurance fraternity.
Andrew Wheeler, Mining Specialist and Client
Relationship Director at brokerage firm Willis
Selected major mining losses, 2018-2019
Date
Country/Territory
Cause
Q1’18
South Africa
Surface fire
Q1’18
South Africa
Transformer fire
Q1’18
USA
Furnace breakout
Q1’18
USA
CBI
Q1’18
Papua New Guinea
Earthquake – power plant
Q1’18
Chile
Machinery breakdown
Q1’18
Mexico
Theft of concentrate
Q1’18’
Canada
Underground rock collapse
Q1’18
Australia
Tailings dam failure
Q2’18
Ghana
Operational & Construction*
Q2’18
Australia
Pitwall failure
Q2’18
Mexico
Tailings dam breach*
Q2’18
French Guyana
Flood
Q3’18
South Africa
Underground conveyor fire*
Q3’18
South Africa
Dragline failure
Q3’18
Australia
Underground longwall fire
Q3’18
Chile
Ship loader failure
Q3’18
Russia
Pitwall failure
Q4’18
Australia
Train derailment
Q4’18
Czech Republic
Methane gas explosion *
Q4’18
Russia
Fire – potash mine*
Q4’18
Chile
Ship conveyor at a port
Q1’19
Chile
Landslip/tailings dam failure
Q1’19
Chile
Mill failure
Q1’19
Australia
Conveyor belt fire
Q1’19
Brazil
Tailings dam failure*
Q1’19
Peru
Torrential rain
Q1’19
USA
Coal – supports to conveyor failure
Q1’19
Canada
Underground fire – conveyor belt
Q1’19
Australia
Flood – various mining companies
Q1’19
Australia
Underground coal – box cut slope failure
Q2’19
Australia
Surface conveyor fire
Q2’19
Peru
Earthquake to waste dam
*Denotes fatalities
Source: Willis Towers Watson/market intelligence as at July 31, 2019
Quantum (US$)
Outstanding
50,000,000
17,000,000
5,000,000
50,000,000
20,000,000
7,000,000
5,000,000
150,000,000
Outstanding
50,000,000
Outstanding
50,000,000
70,000,000
Outstanding
125,000,000
Outstanding
10,000,000
60,000,000
Outstanding
Outstanding
Outstanding
100,000,000
25,000,000
Outstanding
150,000,000+
150,000,000
50,000,000
125,000,000
50,000,000
40,000,000
20,000,000
20,000,000