spRING 2011 GlobAl MARKETs INTERNATIoNAl - Willis

sPeCIal ContIngenCy rIsks
The nature of mining and exploration entails
that employees will be located in remote and
hazardous regions of the world. With the
continued increase in demand for commodities,
it is an unavoidable consequence for mining
companies that to meet this demand, more and
more employees will be exposed to the risks
associated with working in these areas.
During 2010, we have seen a number of Kidnap
for Ransom (K&R) incidents reported in the
world media involving employees from mining
and exploration companies. Those working in
extractive industries are considered targets
not just because of the remote locations of
work sites, but also due to resentment from
local communities at perceived profiteering at
the expense of indigenous people. This risk is
compounded by a perception of wealth for those
connected to large companies operating in this
sector and the value of the product in which
they deal.
The market is unchanged since 2009 in terms of
insurers offering K&R cover. Hiscox continues
to be the dominant K&R insurer with a market
share of approximately 60% followed by Chartis
with an approximate market share of 20%. Both
Travelers and QBE have increased their market
shares with each market benefiting from having
developed successful piracy products.
6 | Willis | Mining Market Review 2011
" durIng 2010 we HaVe seen a numBer
of kIdnaP for ransom (k&r)
InCIdents InVolVIng emPloyees
from mInIng and exPloratIon
ComPanIes"
PReMiuM tReNds
Throughout 2009/2010, premiums remained largely stable.
Underwriters’ ratings for Latin America have been influenced by the
growing trend in the number of Express Kidnaps. Both Mexico and
Venezuela continue to show alarming numbers of kidnaps. However,
this has been somewhat off-set by falling premiums from Colombia
following reduced FARC activity. Pakistan has seen a 40% increase
in the reported number of Kidnap for Ransom cases and, as such, has
attracted higher premiums.
The most significant market change has been the development of
Piracy specific coverage and the continued threat posed to maritime
clients operating in the Gulf of Aden, Indian Ocean, Malacca Straits,
Nigerian coastal areas or in certain Latin American ports.