Balancing sustainability and competition in a dynamic environment
Mining companies and insurance markets mobilized to drive change in 2023 and early 2024.
Climate change and the decarbonization imperative is an issue that cannot be shelved. With catastrophes and geographical exposures under the spotlight in regions such as Latin America and Australia, stakeholder pressures are mounting across the globe.
Meanwhile, the mining sector and (re)insurers are acutely aware of emerging risks such as technologies and geopolitical pressures. Emerging risks cannot simply be fed into a standard risk framework, and future-ready mining businesses are exploring new ways to identify and address changing exposures.
The mining sector has sustained heavy losses, overturning the streak of profitability that property insurance markets have sustained for several years.
In Q1 of 2024, a tier-one account had a headline loss, compounding other large loss events incurring claims of roughly $1 billion throughout the year. Other losses across the sector between $25 million and $75 million make up another $200-300 million.
Despite the spike in loss events in 2023 and early 2024, there has been increased competition for tier-one businesses as insurers focus on managing volatility of the book.
Competition among insurers to back the most resilient mining businesses, is heating up. Both global and domestic markets are stepping up, increasing capacity and trending prices downward.
Liability markets are also stabilizing. The casualty insurance market has achieved profitability for a second consecutive year after an 8-year stretch in the red.
This recent stability is attracting capacity to the sector and encouraging existing participants to increasingly make full use of maximum line sizes, which is further increasing pressure on rates. Underwriters are walking a tightrope of pushing for rate increases where deemed necessary, without jeopardizing positions on programs that they are keen to retain.
A small uptick in global liability capacity and stabilizing rates indicate that (re)insurers are proceeding with caution.
In looking ahead, uncertainties about technology development, geographic concentration, labor shortages, changing regulations, rising costs and falling prices of critical minerals could create execution risks. However, strong M&A activity and partnerships are emerging as a highlight for the sector.
In our latest Natural Resources Conference in Brazil, insurance markets and sector leaders were unanimous – the metals and mining sector has an essential role in transitioning to a sustainable future. Without critical minerals, the energy transition can only go so far. As the mining sector continues to decarbonize and innovate, companies are getting better at articulating their net positive impact. Insurers are acutely aware of the part they will need to play in enabling transition and innovation.
We are keeping our finger on the pulse of the mining market and risk trends and will continue to deliver insights to help leaders make decisions to build a sustainable future.
01
The emerging risks facing the mining sector and how mining businesses are exploring new ways to identify and address changing exposures.
02
We explore the five steps future-ready mining businesses are adopting to build climate resilience.
03
This article examines regional trends impacting mining, focusing on ESG, natural catastrophes, and risk management to secure favorable insurance terms.
04
We explore the balance insurers strike between rate hikes and business retention, against rising social inflation and evolving risks in the mining sector.
05
We discuss how pressures are acting to maintain (re)insurer appetite and competition across the mining markets.
| Title | File Type | File Size |
|---|---|---|
| Mining Risk Review 2024 | 4.1 MB |
