An essential part of any Insurance program is the effective use of Risk Management and loss control strategies to mitigate exposure to loss and improve the risk profile of the client. For mining companies, the proper implementation of these strategies can help save them large costs in the long term.
Here are some quick facts about risk transferring for mining companies:
A Quick Guide:
Insurance policies are sensitive to claims; either frequency or severity of losses can impact premiums significantly. Risk Transfer is a method to avoid risks that can or should be assumed by others. Risk transfer is a way of contractually shifting risk from one party to another.
The purchase of an insurance policy is a form of Risk Transfer, where your exposure to loss is transferred to an insurance company for a premium. Other forms of Risk Transfer include integrating hold-harmless, Indemnity and Insurance clauses into your contracts, allowing you to contractually shift your exposure to risks.
An effective risk transfer program may not always negate the need for adequate insurance protection but it can reduce your costs. When developing a risk profile for underwriting consideration a professional broker will
re view your contractual agreements. A consistent and thorough Risk Transfer approach will assist the broker in negotiating more favourable terms both in the extent
of coverage provided and the premiums you pay. More importantly, a frequency of small claims or a large severe loss can have a serious impact on the premiums you pay and the scope of coverage offered by underwriters.
Some policies are extremely “claim sensitive” so avoiding the possibility of a claim under your policy through simple contractual language can often save thousands of dollars
Typical Risk Transfer Considerations:
- Insurance: What type of policies are needed, are there polices that can be avoided completely through the transfer of risk?
- Contracts: Are proper contracts in place? Have all contracts been properly reviewed?
- Indemnity/Hold Harmless Clauses: As a minimum contracts should make your contracted parties responsible for their own negligence.
- Insurance Clauses: The clause should set out the form, terms and amounts of coverage and specify that you will be added as an additional insured.
- Additional Insured: If the contract provides you with protection in the form of indemnity and there is a requirement of the contracted party to maintain insurance, you should be added as an additional insured under their policy and provided with proof of insurance in the form of a certificate of insurance.
- Contracts: This is a standard industry document and it is usually issued very quickly upon request. If your contracts require proof of insurance you should insist upon promptly receiving a certificate of insurance. The certificate should set out the terms of the coverage and contain a provision to provide you with notice in the event of cancellation or non-renewal.
