The mining insurance marketplace was buffeted with losses from every direction in 2011, including $2.7 billion from natural catastrophes, in addition to a total of $835 million from more than 60 operational losses.
According to a report from the global insurance broker, Willis Group Holding plc, called the Mining Market Review, the estimate of $3.5 billion in total losses that are faced by insurers in the mining industry has caused the insurance capacity to face a withdrawal of 30 percent since the beginning of last year.
The timing of the report’s publication was designed to coincide with the annual conference in Cape Town called the African Mining Indaba, which is attended by natural resource professionals. The report provided estimates that the current available worldwide capacity for business interruption and property damage in the mining industry is $1.25 billion, as of the end of 2011, which has dropped significantly from the $1.75 billion capacity it held at the start of the year.
Willis Group explained that though this doesn’t represent the same degree of capacity loss that was seen in 2001, for example, it could be an indicator that 2012 may be a challenging year for renewing policies for business interruption and property damage insurance.
The report stated that Willis Group believes that the primary risks that mining companies will be facing are exposure to natural catastrophes, resource nationalism, and supply chain disruption and globalization. It went on to detail the events of 2011, and to predict the possible conditions for 2012 in mining-related insurance markets.
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