Slumping metal prices have put pressure on mining companies to cut operations and reduce costs, raising concerns their insurance risks may increase.

“There is the possibility maintenance teams might be at critical levels, or that the focus on areas such as health and safety could be weakened,” Aon Risk Solutions Global Mining Practice Leader Paul Pryor says in a report.

Possible decisions to keep reduced stocks of critical spares may increase production delays after breakdowns and lead to higher business interruption costs, the report says.

Almost 4200 Australian mining jobs were lost in 2013/14 and more than 2000 went last calendar year as the resources boom ended.

Over the past year Aon has noted an increasing number of miners reducing business interruption cover to a “standing charges-only” basis, which includes ongoing costs.

“The rationale is that while business interruption includes a net profit component, low commodity prices have resulted in very low profits, or even losses,” Mr Pryor says.

“However, standing charges remain relatively constant regardless of the commodity price.”

A drawback of that choice is that a sudden jump in commodity prices may leave the insured without cover for loss of profit from an interruption.

Mining insurance premiums are on the slide, with plenty of capacity and a relatively benign claims experience in Australia for the past five years, according to Aon.

A number of traditional mining insurers have increased their above-ground and below-ground capacities, because premium rates still offer better margins than in some other sectors.

New entrants to the Australian market such as Berkshire Hathaway Specialty Insurance have further added to available cover.

“As insurers struggle to maintain their premium pools, our expectation is rates will continue to contract over the near term,” Mr Pryor says.

Despite abundant capital, insurers are yet to make significant innovations, although there have been some coverage improvements and some sub-limit increases, the report says.