A $3.5-billion total estimate of losses facing mining insurers in 2011 has prompted a 30% withdrawal in insurance capacity since the start of 2011, according to the latest Mining Market Review released by Willis Group Holdings plc (NYSE: WSH).
Of these losses, $2.7 billion were a result of natural catastrophe losses, and a further $835 million were the result of more than but 60 operational losses.
The report estimates the current global capacity available to mining Property Damage & Business Interruption (PDBI) insurance programs is $1.25 billion, down from $1.75 billion at the start of 2011.
"Whilst this does not represent the dramatic loss of capacity that precipitated historical hard markets such as 2001, it may indicate a difficult year ahead for the renewal of mining PDBI programs," the Willis report says.
Willis identified resource nationalism (including punitive tax regimes), natural catastrophe exposure and supply chain disruption and globalization as the three biggest risks facing mining companies.