Page 21 - 2016 State of the Market from AmWINS

AmAmWWINISNSStSattaeteofotfhteheMMarakrektet| |1921

it was at the start of 2016. The biofuel the premium that underwriters can get How long cutthroat market conditions
market, which was rocked by GCube’s in the field has dropped as well,” says remain in both energy and mining
re-underwriting of accounts in 2015, has Barnes. remains to be seen.
accounts contending with higher rates
and more restrictive terms than a few Industrial metals mining has also been “The concern is that underwriters
years ago. “The market has stabilized hit hard by a lack of global demand. are beginning to run at levels where
in biofuels, with the accounts leaving “That market has been quite soft, with several large losses or further significant
GCube finding a home – but at a price,” additional insurance capacity coming reductions in premium could actually
says Barnes. on board. Even if a company has been wipe out their business and require
well-marketed before with big rate significant Lloyd’s Corporation
MINING reductions achieved, we will still see a 5 intervention,” says Neighbour. “The
to 20 percent rate reduction today, with current downward trends simply can’t
Underground mining falls into two key companies that weren’t heavily marketed continue indefinitely.”
market segments, both of which are seeing reductions of more than 30
seeing downward pressure on rates and percent,” Barnes says.
deductibles as well as reduced buyer
demand.

Coal mining has been decimated by a • Pricing reductions of 20 percent are common in the energy and mining sectors,
combination of environmental reforms with some accounts seeing 30 percent or more.
in power generation, reduction in
metallurgical coal demand, and new low- • With a decline in barrel prices pushing energy producers out of business,
cost foreign production. underwriters are competing for fewer accounts.

“Many coal operations that were formerly • London remains strong in upstream and midstream energy accounts.
Fortune 500 companies have reorganized
or ceased operations. At the same time,
rates have dropped off tremendously, so