The world outlook for insurance remains positive for the buyer.
While there has still been some merger activity that has seen consolidation and reduction in the number of insurers there is more active and aggressive competition for premium.

The impact of the North American hurricane losses to not appear to have affected the market generally and 2006 was a year that saw few catastrophic events.

Over the past four years now, insurers have experienced consistently good profits.  The return to profitability has seen capital flow back into the sector.  As a result insurers have been keen to increase their market share and portfolio size.  In turn, this has led some insurers to commence underwriting new lines and relax their approach to what they see as less desirable risks.

While the insurance market in Australia has also undergone significant restructuring involving mergers and takeovers that has reduced competitiveness, some evidence is being seen that insurers are now being forced to compete.  Overall, insurance rates are decreasing.

For the mining industry this is good news.  Although there are few insurers who understand and can meet the various demands of mining risks, there is sufficient competition to ensure that premiums are the same or lower than in previous years.


Property

With regard to property risks, insurers are beginning to provide broader cover.  Insurance is now available for some mining perils that have not been obtainable from the market for five years.  

All insurers are still insisting on adequate standards of risk management and loss control.  Capacity for larger risks does not appear to be a problem.  

There are still few underwriters of underground mining risks and most of this cover has to be purchased from the London market.

While there is pressure to reduce premium rates, insurers are prepared to arbitrage this for lower deductibles.


Liability

Public Liability insurance has been a major problem with respect to premium, cover and capacity over the past five years, particularly for mining companies.  

The Australian States each enacted civil liability laws in 2003/04 that reduce access to common law claims and codify contribution in negligence.  While the results of the legislation are still to be measured, there does appear to be reduced access to litigation and lower


awards of damages.  At this point it appears that the legislation has had the desired effect and the number of plaints has decreased.

In this climate, insurers have more confidence.  Capacity has returned to the market and premiums rates have reduced significantly.

For mining companies, the major concern of public liability insurers is the “worker to worker” claim where an employee of a contractor is injured on the mine site.  If adequate protection against these claims is not included within miner’s contract conditions, premium penalties will apply.


Directors and Officers Liability

Directors’ and Officers’ liability is seeing new underwriters entering the market at a time of unprecedented growth in Western Australia.  The combination of new markets and high profitability of companies generally has led to a substantial lowering of premiums and increase in offer of capacity.  


Workers Compensation

Reforms made to the Western Australian Workers Compensation and Injury Management Act has not resulted in price increased as predicted by insurers.  In fact the opposite has been the case and premium rates have reduced between 5% and 20%.

While the number of insurers has not changed, there is competition which makes companies with good workers compensation claims records and injury management procedures very attractive and has created competition that has assisted in paring back rates.