The Australian mining insurance market will remain soft this year, but reasons for large rate reductions will be scarcer, Marsh says in a global report on the sector.

Renewal rates are forecast to range from flat to down 5% in mining property and casualty markets in Australia.

Last year, competition among traditional insurers and new entrants pushed down casualty premiums, with placements for new operations and divested mines hotly contested.

“We expect that rate reductions [this year] will be harder to obtain, particularly on underground risks, where few alternative markets are available,” Marsh says.

A devastating dam failure at the Samarco mining project in Brazil in 2015 has continued to affect markets, including Australia, leading to additional underwriting requirements.

“It is now standard practice that clients will be requested to provide detailed information with regards to their tailings dam risk profiles and management controls,” the report says.

Worldwide, Marsh says last year brought further premium declines in mining markets, concentrated in physical damage and business interruption and terrorism risks.

“Physical damage and business interruption remains the largest spend for our mining clients by a meaningful margin, and within this market, renewals for a consistent group of Marsh mining clients saw underwriting total premium income decline by 16%,” the report says.

An increase in sums insured is expected as commodity prices recover, but the report says this is not yet a dominant theme, while capacity continues to increase.