The mining industry has seen its business interruption exposures increase “exponentially,” an expert has said.
Paul Pryor, global mining practice leader at
Aon Risk Solutions, said that commodity prices have been on the rise since 2016 which has pushed up BI exposures.
“What basically happens with an increase of commodity price environment is their business interruption exposure massively increases,” Pryor told
Insurance Business. “Having gone through a period of very low BI exposure, this is now reversing and creating a massive exposure to them.”
Pryor explained that while BI exposures are rising, they are yet to meet the levels seen during the mining boom which peaked in 2011. At that time, he explained, an analysis of mining claims found that the BI component was five times that of the property damage component.
Since then, miners have seen commodity prices slump, which prompted BI exposures to fall. However, with exposures now back on the rise, Pryor said brokers need to ensure clients are on top of the risk.
“It is not new because it has happened before, but it happened five or six years ago and people have moved on,” Pryor said. “Clients and mining companies need to look at that BI exposure again because it is becoming one of their biggest risks.”
In addition, Pryor outlined that some insurers are looking to increase prices for mining clients but other markets are limiting increases.
“Insurers have been trying to increase rates over the past year or so, with some insurers even walking away from accounts if they don’t get rate increases,” Pryor said. “What we have also seen is that there have also been some other insurers that have been waiting because mining is an attractive risk and the rates compared to other industries are quite a lot higher.
“Markets are quite interested in mining so when we get some markets that are increasing their rates, brokers can look around at alternatives. There are quite a few markets out there that are willing to come in and replace that lost capacity.”
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