Mining companies are increasingly being held to greater account for environmental damages. Liabilities from a gradual or sudden polluting incident can have severe repercussions for mining companies from both a financial and reputational standpoint. Federal or state governments may revoke or suspend operating licences, and in many cases, large penalties will be levied. In addition to mining regulators putting mining companies under greater levels of scrutiny, non-governmental organisations (NGOs) are increasingly highlighting the shortcomings of mining companies, which can lead to upticks in political risk, such as protests.
Coinciding with these developments, the international insurance market has evolved significantly over the last decade to develop specialist products to mitigate exposure to the litigation costs and the liabilities around environmental risks. There is now significant capacity of nearly USD500m, provided by 20 proactive insurers, for environmental risks. This capacity, combined with risk appetite of the carriers, can provide coverage for both on and off-site cleanup costs, along with toxic tort liability, in order to provide meaningful coverage for the mining industry. Most carriers will also add business interruption exposures and loss of revenues as a result of pollution conditions. Coverage is always tailored to the underlying project or portfolio of the insured.
JLT Mining understands that environmental risks must be strategically managed in order for mining companies to operate to target, to be in a position to acquire or dispose of assets without long-tail liabilities, as well as to manage indemnities or escrow funds.
As such, and in response to the growing concern of environmental risks amongst corporates, particularly the natural resources industry, JLT has a created a specialist Environmental practice. Working alongside JLT Mining, this team comprises of experts with a wealth of experience of environmental risks. Aside from providing advice on contract modifications and procedural/operational changes to mitigate environmental risks, the team can also offer pollution coverage for mining risks.
JLT’s Environmental Specialty Practice (ESP) team provides the strategic expertise and analysis to help our clients better understand their exposure to environmental risks. We provide a complete suite of risk services; from the identification and management of environmental risk using our Analytics and Modelling division, to the broking and placement of complex Environmental and Professional Liability products, and the management of large or intricate claims.
For further information, please about the capabilities and the variety of solutions JLT’s ESP team can offer please download their capability document here.