The international Liability market in London remains soft with little signs of hardening in the medium term despite two key General Liability underwriting teams - Marketform and Novae - going into run off in the past year. The soft market outlook also remains intact despite the occurrence of several large claims, for example the summer 2016 Husky Oil spill which saw 200,000 litres of oil spilled into the North Saskatchewan River. The majority of the Liability markets in London had exposure to this risk.
The mining industry continues to benefit from these soft market conditions, and with new syndicates such as Probitas and Neon starting up there is still ample capacity, resulting in the continuation of rate reductions at renewal and competitive pricing for new risks. The good news is that medium sized mining companies remain a target area for most insurers, with new products being developed accordingly. Aegis has recently launched a new product called Miner Rescue Insurance for junior and mid-tier miners. The product is aimed at precious metal underground mines, yet in time they are looking to broaden this out to soft rock, coal, and open pit mines in 2017.
Yet while mining risks are being pursued by London market underwriters, there are two factors that continue to influence London participation on international mining risks. Firstly, local rates in key mining territories such as Australia and South Africa have reduced significantly in recent years which has meant that some London markets are unable to compete with the aggressive local pricing. It is also worth noting that underwriters continue to place a strong emphasis on Employers’ Liability attachment points, especially in more litigious areas such as Chile.
Secondly, Liability markets still have the Imperial Metal’s 2014 Mount Polley pollution event at the forefront of their minds when reviewing mining submissions. This incident saw 10 million cubic metres of water and 4.5 million cubic metres of slurry spilling into Polley Lake and is considered one of the worst environmental disasters in modern Canadian history. The Samarco tailings dam disaster in Brazil in late 2015 reinforced lessons learnt from Mount Polley; markets have become more stringent in questioning insureds’ risk management practices, with a particular interest in mitigation tactics to reduce pollution exposure and tailings dam failures.
With commodity prices remaining low there is often a temptation for insureds to switch markets at renewal in a bid to reduce premium spend, however it is important to remember the importance of establishing long term relationships in the insurance market.
Tip for buyers
Insurers value those insureds that view them as partners, not purely as a means for transferring risk. Those insureds that build strategic partnerships with the market will inevitably be better placed for when the market pricing cycle eventually turns, and in the event of a claim.
For further information, please contact Jessie Entwisle, Account Handler, International Casualty, JLT Specialty at firstname.lastname@example.org