Capacity for mining liability cover has increased for a third straight year as insurers compete aggressively for business, according to a Willis report.

The global broker says mining property damage and business interruption policies are experiencing double-digit rate reductions and international carriers are showing more flexibility on price than coverage.

“Pricing is in freefall … raising questions about sustainability,” the report said. “Competition to write mining business is fierce. Due to the volatile nature of losses in the industry, mining risks have historically come with healthy premiums for insurers, making the sector attractive for insurers chasing top-line growth.

“Where one insurer breaks rank, it can make it difficult for other carriers to hold firm on conditions in an environment where underwriters are chasing premium.”

The broker says capacity for any one mining risk is about $US1.5 billion ($2.08 billion).

Willis Natural Resources associate director for mining and metals Freddie Fife said: “There’s opportunity here. The pendulum has swung in buyers’ favour after years of hard market challenges and now is the time to open up negotiations on coverage for challenging exposures.”

The report says in Australia, there is evidence the market is continuing to segment risks along the lines of risk profile and loss history.

“Insurers are starting to show a willingness to underwrite commodities that were out of favour as competition for premium heats up, especially for well-managed risks. The Australian mining industry has had a dynamic year, with divergent commodity pricing, notable climate-related claims, green shoots for insurance capacity, and policy effects on areas such as uranium and environmental, social and governance.”