There is a continued constriction of insurance capacity for thermal coal operations - Willis Towers Watson

The Australian insurance market has seen a continuation of hardening conditions during the first half of 2020. Rate increases continue to accelerate to address premium adequacy across the mining portfolio as insurers seek to return to underwriting profitability, warns Willis Towers Watson in its 2020 Mining Risk Review.

Enforcement of underwriting guidelines
In addition to this rating environment; coverage terms and conditions are being reviewed and certain coverages being tightened by insurers. There are additional levels of rigour in the review of individual mining operations with the enforcement of underwriting guidelines and multiple levels of internal approval required before capacity is offered. This has resulted in certain markets restricting line size or electing not to participate if they are unable to achieve the premium levels or terms and conditions that they require.

Existing lines reviewed
While capacity remains stable, insurers are reviewing their deployment to each risk; the exception being the continued constriction of capacity for thermal coal operations, with further insurer withdrawal from this area of the mining industry.

Submission requirements
Given the level of scrutiny of information in the current market environment renewal processes must start earlier than in past years and detailed submissions are required to achieve best results and demonstrate risk quality to insurers. The submission information now expected include:

  • Recent risk survey reports for each site which details the activities and operations, loss estimate calculations, risk management and mitigations, water management processes, risk recommendations and subsequent responses.
  • Natural Catastrophe exposures
  • Tailings Dam Information – inspection and engineering reports, construction method, dam break studies and future plans for these facilities
  • Property damage values – Detailed breakdown of values by area of operation and valuations
  • Business Interruption calculations with commodity price assumptions