Despite key uncertainties, the global mining insurance sector is yet to be considered a truly hard market, according to international consulting and broking giant Willis Towers Watson.
In its Mining Risk Review 2019 report, Willis Towers Watson revealed four key uncertainties within the mining industry that need to be addressed:
- Digitization – According to the report, a combination of negative attitudes, increased cyber risk, a failure to train properly and upskill, and the potential for the process to discard valuable human experience during the digitization process have likely created new exposures for mining firms that could threaten project viability.
- Bottlenecks – In many cases, getting a mine back to operation after a major incident is dependent on factors outside the mine operator’s control; too often in the event of a major loss, the precise cause can often remain uncertain, the report said.
- Geopolitical risk – Increased tariffs, regulations, legislation and tax liabilities imposed by various jurisdictions have had a direct impact on the viability of mining projects in a variety of locations around the world, especially given the global nature of the industry’s supply chains.
- Social economic development – The relationship that miners form with local communities is a critical consideration when developing an effective risk management strategy. Mining industry risk managers and their teams need to be looking to the deep relationships and activities that need to be built and developed for real and sustainable long-term progress.
“Our 2019 Review is being published in the aftermath of yet another tailings dam tragedy. But from an insurance perspective, although rates are generally hardening as a result of tailings dam and other losses, this is still not yet a truly hard market,” said Graham Knight, global head of natural resources at Willis Towers Watson. “Capacity remains plentiful by historical standards and when rates are on an upward trend, we are by no means in a truly distressed situation.”