BHP Billiton and its partner Mitsubishi Developments are believed to have made the world’s largest out of court settlement of its type with insurers over flood damage to their Bowen Basin coalmines in 2007/8.

Reliable sources have told insuranceNEWS.com.au the agreement was reached in Singapore last month following a weeklong meeting between insurers and BMA, as the mining joint venture is known.

Exact details of the settlement are not known, but it is understood that it totals at least $350 million and is 3.5 times the size of the previous record, which involved a negotiated settlement for flood damage and business disruption to a mining company relating to a Chilean copper mine. That settlement was for more than $100 million.

The payment is believed to cover damage to equipment, remediation work and business interruption.

BHP Billiton says it cannot comment on the settlement as it is in a blackout period in the run-up to the release of its annual results on August 22.

Another dispute relating to the same rain events between Bowen Basin coal miner Ensham Resources and its insurers is currently heading for the courts.

Observers say BMA’s ability to negotiate a settlement is a significant achievement given the magnitude of the claim.

Following the 2007/8 floods BHP Billiton has moved to self-insurance for its coal-mining operations, using its wholly owned Guernsey-based captive Stein Insurance to take over its risk.

The Bowen Basin coalfields were also damaged by the 2010/11 rains that flooded Brisbane, but the effects were mitigated because miners had installed high-powered pumps like those used to deal with flooding in New Orleans following Hurricane Katrina.

Because the 2010/11 floods were caused by months of rain rather than a few readily identifiable storms, liability under flood insurance policies is far more contentious than for 2007/8.