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Resilience is within reach: Practical strategies to mitigate mining losses

20 years of insured claims data offers powerful perspective: large, volatile, and under-recovered losses are significantly impacting the mining industry. Download the definitive report on mining loss drivers and how to build true resilience.

20 years of Marsh claims data reveals what drives the largest losses — and exactly what miners can do about it. Here are the evidence-based actions that matter most.

Mining losses are not inevitable. Marsh's Mining losses uncovered: The cost of disruption and the path to resilience report — drawing on 135 insured claims totaling approximately US$15.3 billion over two decades — reveals that a significant share of the largest losses in the dataset stem from causes that were identifiable and preventable. These include improper maintenance, absent spare parts, inadequate controls, and insufficient flood mitigation.

The question is not whether losses can be reduced, but which interventions deliver the most value. What follows is a structured guide to the most impactful resilience strategies, grounded in 20 years of real claims experience and the practical wisdom of mining's leading risk professionals.

The opportunity in the numbers: Six key findings

Average insurance recovery ratios in mining sit at just 45–55%, compared to ~75% for sectors with more standardized exposures. Proactive risk management doesn't just prevent losses — it materially improves what you recover when losses do occur. Below are six key findings, and opportunities, uncovered in the report.

Machinery breakdown is one of the most financially damaging hazard categories in Marsh's dataset — $1.53 billion in gross claims — yet it is also among the most preventable. The industry's shift toward single, large-capacity processing units means that a single component failure can cascade into months of lost production. To address this challenge, organizations should consider a three-layered, integrated maintenance approach:

Preventative maintenance: Time- or cycle-based service following OEM guidelines. Includes non-destructive testing of mill shells and crusher shafts, bearing lubrication, vibration monitoring, and transformer electrical testing. Keeps equipment within design tolerances before failure occurs.
Predictive maintenance: Sensor-based real-time monitoring of vibration, temperature, and oil composition to detect anomalies in gearboxes and bearings before failure. Analytics enable scheduled repairs rather than emergency responses to help avoid unplanned outages.
Reliability-centred maintenance: Root cause analysis of past breakdowns feeds back into design, procurement, and operations. Cross-functional teams embed lessons learned into process redesign, eliminating failure modes rather than just managing them.

Implement a layered three-pillar maintenance program

Combine preventative, predictive, and reliability-centred maintenance into a single integrated program. Key implementation steps:

Conduct a formal assessment of current maintenance maturity against each pillar
Install sensors on highest-consequence assets first (mills, crushers, conveyors)
Establish a root cause analysis protocol for all significant equipment failures
Build cross-functional teams linking reliability engineering with procurement and operations

Machinery breakdown claims carry BI shares exceeding 86% of total claim value, meaning the production loss vastly exceeds the physical repair cost. Preventing the breakdown prevents both.

Many of the longest and most expensive mining outages were not caused by the failure itself, but by the absence of a replacement part. James Fryer of MIRA recounts operations that waited more than a year for a replacement mill motor — far exceeding the policy sub-limit and leaving the operator to absorb much of the loss. James says, "Storing critical spares onsite, including mill motors, transformers, and structural components, can reduce business interruption to a minimum."

Build a structured critical spares strategy

A formal spares strategy should map consequence, lead time, and failure probability for every critical component. Key steps include:

Identify all single-point-of-failure assets on each processing circuit
Obtain current lead times directly from OEMs for key components (motors, ring gears, large bearings, transformers)
Develop an onsite or regional inventory plan for components with lead times exceeding your acceptable downtime threshold
Explore consortium spare-sharing arrangements with peer operators for ultra-large components
Engineer redundancy into processing circuits where capital allows, dual primary crushers, parallel conveyors, to enable partial production during outages

The capital cost of holding critical spares is typically a small fraction of the monthly revenue loss from an unplanned outage. A single month of lost production at a major copper mine can exceed tens of millions.

Fire and explosion are the single largest operational hazard category in Marsh's dataset: $3.95 billion in gross claims, representing 25.7% of the total. It also carries a recovery ratio of only around 50%, meaning operators bear more than half the loss themselves. Hot work fires, James Fryer notes, have been a leading cause of industrial losses for at least 25 years.

Strengthen fire prevention and hot work management

A comprehensive fire risk reduction program combines controls, technology, and behavioral change, including the following steps:

Implement a rigorous hot work permit system specifying when and where hot work is permitted, with mandatory isolation of combustibles and fire watches
Install automated fire detection and suppression at high-risk locations: transfer points, conveyors, processing vessels
Deploy thermal imaging cameras for early detection of overheating motors or bearings
Schedule regular electrical thermal scanning and arc-flash studies
Conduct regular firefighter training and emergency drills; insurers are increasingly scrutinizing fire response capability during underwriting

A single conveyor fire can halt an entire processing circuit. The average fire/explosion claim in Marsh's dataset is $115 million, making prevention investment highly cost-effective.

Geotechnical events produce the sector's most catastrophic individual losses and carry the heaviest regulatory and third-party consequences. While they are lower in frequency than fires or machinery failures, their tail risk is extraordinary, particularly given the growing scale of tailings storage facilities.

Invest in structural integrity and geotechnical monitoring

Implement continuous real-time monitoring of tailings dam piezometric levels, slope stability indicators, and seismic activity
Engage external specialists for independent structural integrity reviews at regular intervals; don’t rely solely on internal assessments
Develop and regularly test emergency response plans specific to geotechnical scenarios, including community notification protocols
Document all near-miss events and incorporate findings into risk registers – near misses are predictive of future events
Engage early with regulators and insurers on tailings management standards to reduce the risk of post-event disputes

Geotechnical events account for 16.5% of gross claims ($2.54 billion) and carry recovery ratios well below market average due to regulatory complications and third-party liabilities.

Flooding drives 69.2% of all-natural catastrophe (Nat Cat) claim value in Marsh's dataset — the single largest Nat Cat hazard. Climate change is intensifying both flood risk and the water scarcity risk that follows drought. Mining operations cannot wait for these risks to manifest; climate resilience must be engineered into site design.

Invest in flood controls, drainage, and climate-resilient design

Commission site-specific flood risk assessments using current climate projections, not historical rainfall averages
Invest in dykes, levees, diversion channels, adequate culverts, and robust pumping systems sized for extreme rainfall scenarios
For underground mines: verify that shaft seals and pump stations can handle the highest projected rainfall intensity
Develop water management plans that address both flood and scarcity scenarios
Extend supply chain risk management to include flood exposure at key rail, bridge, and port infrastructure
Consider parametric insurance solutions that trigger payment based on rainfall thresholds or river height, supplementing traditional property coverage for revenue loss when access roads are washed out

Floods have lower payout percentages despite accounting for the largest share of Nat Cat claims. Dedicated flood mitigation can help support loss reduction and improved insurance recovery.

Even with best-in-class operational risk management, some losses will occur. The goal of insurance program design is to ensure that when they do, recovery is maximized. Mining's persistent 45–55% recovery ratio reflects structural gaps in how programs are designed and maintained — gaps that can be substantially closed.

The three main recovery gap drivers are: high deductibles and weeks-long waiting periods before coverage begins; BI values based on outdated commodity prices or production assumptions; and sub-limits that don't reflect the actual duration or scale of modern mining outages. Addressing all three requires active program management, not passive renewal.

Redesign your insurance program around current exposures

Conduct annual BI valuations based on current commodity prices and production rates, not historical averages
Review indemnity period lengths against realistic recovery scenarios, including current equipment lead times
Explore captive structures to retain more risk efficiently and access reinsurance markets directly
Layer parametric solutions alongside traditional property cover to close gaps for uninsured exposures (such as pit wall collapses with no physical property damage, ice road failures, water scarcity)
Develop detailed site-specific risk engineering reports and risk registers, which can increase underwriter confidence and improve coverage terms
Engage insurers and brokers early in program design, not just at renewal, as early engagement enables co-creation of coverage specifically tailored to your exposures

Patrick Walker of Rio Tinto describes the value of a layered program combining local policies, global placements, and a captive. Lars Gono of Swiss Re notes that parametric solutions are increasingly embraced by mining companies to complement traditional cover.

The enterprise risk management foundation

All six operational pillars work best when they sit within a robust enterprise risk management framework. Patrick Walker emphasizes that Rio Tinto embeds risk management into the heart of its operations, with dedicated risk engineers working alongside operational and finance teams — not as a separate compliance function, but as an integral part of how decisions are made.

James Fryer of MIRA adds that organizations working to harmonize policy wordings across the market are helping reduce ambiguities and improve claims outcomes – a benefit that accrues to miners who engage actively with the process.

Where to start

If you can only act on one recommendation today, it is this: review your business interruption declared value. BI accounts for over 80% of mining loss value and the most common reason claims are under-recovered is that BI values were based on outdated assumptions. Correcting this one issue can materially change your recovery outcome.

Collaboration is essential

Resilience is not built alone. The most effective mining risk programs involve early, ongoing collaboration between operators, risk engineers, insurers, and brokers. Marsh's team of mining specialists can support your organization in building detailed risk engineering reports, designing bespoke insurance programs, and leveraging parametric solutions tailored to your specific exposures.

The data is clear: miners who invest in resilience, operationally and through smarter risk transfer, are better protected when losses occur, recover more of what they lose, and pay less over time for the insurance they need. The cost of disruption is too steep to leave resilience to chance.

Get the full data-driven picture

Marsh's Mining losses uncovered: The cost of disruption and the path to resilience report provides the complete dataset, experienced commentary from Rio Tinto, Swiss Re, and MIRA, and detailed resilience strategies for mining executives. Download today to learn practical strategies to help you reduce loss frequency, improve insurance recovery, and build a foundation for long-term resilience.

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