The 2025 insurance outlook for the mining sector is shaped by various factors, including evolving insurance industry regulations, operating models, mining regulations, and emerging risks. Here are some key risks and developments to consider as your entity plans its insurance and risk management approach for 2025:
Key Risks for 2025
There are several risks that Mines face and most have traditional insurance and risk transfer mechanisms that are currently being used to deal with them. However, the following risks will affect a broad spectrum of miners regardless of the minerals they are focused on:
A. Environmental and climate change risks
Mines are exposed to increasing environmental and climate-related risks, such as natural disasters, water scarcity, and pollution.
Climate change can make it difficult to access water and energy, which can limit the establishment of new mines or make existing mines uneconomical.
Mining activities like coal mining, contribute to greenhouse gas emissions, which has been a global focus matter. The global insurance market has been decreasing its appetite for mining risks with large greenhouse emissions. This may mean increased insurance premium rates on certain risks or curtailed cover for mining entities particularly if your cover has offshore reinsurance participation.
Mining activities especially by the smaller scale and artisanal miners have been linked to deforestation, erosion and water pollution among other environmental damage matters. An enforceable rehabilitation approach is required for these small scale players either collectively through associations such as Zimbabwe Miners Federation or company specific insurance solutions.
B. Regulatory and compliance risks
Mines must navigate complex regulatory frameworks and comply with evolving laws and standards and will also be affected by changes in local insurance regulations.
The proposed localisation of Marine insurance business will most likely result in mines having to purchase all their marine covers locally in Zimbabwe. This may initially result in higher premium rates than those being enjoyed on offshore policies as the local re/insurance market absorbs these risks. Over the coming years, the rates will be expected to soften.
The anticipated changes to external reinsurance placements (currently in consultative stages) are expected to improve the quality of participating external companies participating on local risks and also ensure that where there is local capacity to absorb risks, these are kept in Zimbabwe.
This will mean that where mine insurance programs are approved for external reinsurance placement, there will be greater scrutiny of the players in a manner aimed at protecting mining companies and ensuring the viability of external partners when it comes to loss payments.
C. Cyber risks
Of particular interest is the growing cyber exposure to local mines due to productivity being increasingly integrated with sophisticated computer and cyber based automation systems. With the growth of Artificial Intelligence (AI) this could also result in further cyber integration for mines. It is therefore important to review your cyber insurance cover and risk management approach.
D. Market and economic risks
Mines face volatile commodity prices, shifts in government policies, events such as war and supply chain risks among others. Various risk management and insurance solutions exist to help mines navigate such risks.
For example, suppliers to a new mine might require insurance guarantees to be able to extend credit terms for equipment supply. A new investor going into a country for the first time might require political risk insurance solutions. Shifts in government policy may result in extra compliance requirements for mines some of which can be transferred to the insurance market.
At Firstlink we assist mining entities and related companies to structure adequate cover for their operations. Our clients also benefit from our bespoke 360° Risk Management service. Talk to us today on (0242)744048/79, 0772434103, 0772392075 or 0773589694.
