Invent Insurance Agents call for collaboration between Insurance players & Mining Business
Insurance is not always something people can think about when the mining business is mentioned. It is common knowledge however that the mining business is a risky business and risky business is the reason insurance companies are in business. As such, there is a great need for the collaboration of the two industries, with the view of protecting the growth of the mining industry.
A market intelligence report by Willis Towers Watson in 2020 shows that insurance companies paid about a US 1.3 billion in claims in 2019 from global mining losses caused by several factors including machinery breakdown, fire and explosion, natural catastrophes, derailments, and strikes & riots. To some, claims payments of US1.3 billion might seem like a lot but one has to wonder how much more losses did mining companies experience which was uninsured. It is not clear how much in insurance claims payments Zimbabwean miners have received, but we have realized a fair share of accidents in the mining industry of late.
Just like with any other business, insurance is key in protecting the financial security of the mining business and it can also be used as a growth agent. Zimbabwe’s mining landscape has a mixture of larger mining companies, small scale miners, and illegal miners. Larger mining companies have shown a great understanding of the need for comprehensive risk management, which includes the need for insurance. It is however the smaller mining companies that are not taking full advantage of insurance solutions available to them. This could be because the local insurance industry has not done much in terms of product development concerning the setup of the mining sector in Zimbabwe.
The need to turn the mineral wealth of Zimbabwe to profitable enterprises has been a major thinking point for policymakers in the nation. One way of achieving this is developing the potential production of the small-scale mining sector, which in itself is turning risk into a path of growth. The stepping up of insurance players to design and deliver solutions that manage risk and optimize benefits for the small-scale miners will take Zimbabwe’s mining sector on a growth trajectory. However, insurance companies in Zimbabwe have had a limited appetite to insure small scale mining risks.
It is the duty mainly of insurance agents and brokers to step up in designing industry-specific policies and guarantees that optimize operating risk and expand the power to obtain capital, which will strengthen the small-scale miners’ business. This on its own is not possible unless the insurance players take time to study the mining sector with the view of having a deep technical understanding of the sector. Keeping up with the pace of changes in the mining sector will have to be one of the key attributes of the insurance players who seek to take the lead in this. Mining sites by their nature operate like moving construction sites as such there are always problems in defining property such as underground works and roadways and things such as the unpredictability of rock material behaviour never make it easy for insurance players.
The nature of the unpredictability of most of the risks in mining is a good reason for insurance product developers to support miners, particularly the small-scale miners. This can be done through conducting risk assessments with specialist mining engineers, where major risk exposures and their potential damage will be identified, and major recommendations done which will make the risk attractive to insurers and reinsurers. It will always be a good thing to structure insurance policies according to the mining clients’ needs and therefore one size fit all policies will not be ideal, but rather bespoke solutions. There is, therefore, a need for mining associations and mining companies to have close collaboration, open communication which will lead to sustainable partnerships that will not only benefit the mining entities but the Zimbabwean economy. Invent Insurance is beginning an exploration into the mining industry which will cause a drive for well-balanced risk transfer mechanisms to the insurance carriers.
Invent Insurance can be contacted at [email protected] or +263 732441441