In our industry, we somewhat inevitably talk about claims a fair bit – after all, the insurance policy is predicated upon a “Promise to Pay.”
How big is BIG?
What do the biggest claims of the year portend for the future?
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Now, to the person in the street, a big claim is when their car is trashed, or their house is flooded. To the owner operator, it’s when their fish and chip shop burns down. To the factory manager, it’s when the stock is destroyed by fire. But, in the mining industry, the word “claim” has a rather different meaning.
This is an industry where a dragline (used in coal mining) has a replacement value of $220 million, where it can take three years to replace a SAG (Semi Autogenous Grinding) Mill, and where the insurable gross profit can be up to $30 million per day – the cost of a claim grows rather rapidly at these numbers when you have a major claim which takes a year or more to sort out.
Total Losses in 2011
It’s a risky business, exposed to natural catastrophe and to operational failures and this year alone, notifiable losses exceed 60 in number from a wide range of causes – earthquakes, floods, rain storms, derailments, smelter explosions, port damage due to wave action (“overtopping”), molten metal breakouts from furnaces, underground fires, longwall miner failures and fires (a machine used for underground coal mining), the list goes on.
The largest loss estimate is around $650 million and the aggregate estimated insurable cost is over $3 billion. This is on top of a large number of significant loss incidents from 2007 through to 2011 which are still the subject of discussion, argument and litigation.
We’re facilitating a forum in London on 30 and 31 January 2012 to look at this and see if we can, as an industry, find a better way to deliver on the “Promise to Pay.” Will keep you informed…..
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