Broker Willis Towers Watson has issued its annual Mining Risk Review which found that the pace of insurers refusing to underwrite mining risks has increased.

However, the report’s authors say that clients and brokers have been surprised by the number of underwriters which are refusing to write fossil fuel business.

The report stated: “If only conditions in the global mining insurance markets were more certain. As we move further in to 2019 we are finding that the atmosphere in the market is becoming increasingly uncertain, not only because of the recent loss record in the industry but because of the increasing and worrying trend for insurers to withdraw from what they consider to be environmentally unfriendly industries such as coal.”

Given the growing global focus on climate change and the threat from C02 emissions coupled by pressure from shareholders for firms to be more socially and environmentally aware the broker’s belief that it comes as a surprise to some is interesting.

“We are witnessing a major change of underwriting strategy from some of the largest re/insurers currently operating in the market,” it added. “Where this has not been anticipated by buyers and their brokers, it has led to some serious placement challenges, with brokers often having to supplement lost capacity with underwriting support from insurers at very different terms than had been negotiated the previous year.”

The sector has also been blighted by a poor loss experience with a series of major claims in recent year.

The report, however, does cast a slightly more positive note despite the challenges it faces.

“Yes, rating levels are generally on the rise. Yes, insurers are certainly scrutinising programmes more closely, while gaps in coverage are becoming increasingly common, particularly for tailing dam exposures,” It explained. “But the reality is that this is not yet a truly hard market; capacity remains plentiful by historical standards and when rates are on an upward trend, we are by no means in the distressed situation that the market found itself in in the immediate aftermath of 9/11 some 18 years ago.

“Sooner or later, the laws of supply and demand would suggest an easing of these conditions at some stage in the future; it will be interesting to see which buyers – and their brokers – will be best positioned to take eventual advantage to navigate their way towards a more certain future.”