The Australian mining market has seen further increases in premium rating throughout the first half of 2019 as conditions carry on from the previous year, Willis Towers Watson (WTW) says in its latest Mining Risk Review.

Capacity remains relatively stable in Australia, although underwriters are reviewing the deployment of their capacity to every operation, according to Stephen McDermott, Placement Services Director at WTW in Brisbane.

“The previous 12 months was another challenging year for underwriters in this sector and has seen the enforcement of underwriting guidelines from management, with requests for more granular information than in past years as underwriters seek to return to underwriting profitability,” he said.

Optimal renewal outcomes will require submissions detailing operational exposures – especially tailings dams – as well as natural catastrophe exposure, analysis of commodity price changes, risk engineering programs and mitigations that are in place.

An exception to the mostly steady capacity was continued constriction for thermal coal operations, with more insurers recently announcing they are also withdrawing from this part of the mining sector.

Globally, the report found mining insurance did not yet constitute a genuinely hard market.

“Although rates are generally hardening as a result of tailings dam and other losses, this is still not yet a truly hard market,” Graham Knight, Global Head of Natural Resources at WTW, said.

“Capacity remains plentiful by historical standards and when rates are on an upward trend, we are by no means in a truly distressed situation.”

Also contributing to the review, Munich Re Head of Mining Gunter Becker says the results for mining insurers have been “mediocre at best” for a couple of years, with the premium pool drained by attritional losses.

“During the past two years there has been not enough money to pay the bigger losses for which we are in business,” he said. “However, I would like to believe that currently rating levels are generally going in the right direction and market forces are doing their job.”

The politics around climate change – its impact and the reasons for it on one side and the catastrophic incidents in the mining industry on the other – is directly affecting the mining insurance market, he says.

“All this is putting pressure on those insurers and reinsurers supporting the mining industry as one, which we still need for some time. The mining industry needs to overcome the perceptions.

“This will allow us underwriters to concentrate on what we know best – providing sustainable insurance cover for a sustainable industry.”