Pioneer’s client relationships ensures effective underwriting of mobile operators

11 December, 2015

The current environment of low commodity prices is causing well documented challenges to the mining industries - a setting which could raise concerns about the risk management processes of the mobile operators that supply the industry. This is based on the assumption that as margins are squeezed so might safety and maintenance regimes, and mobile operators’ interest in, and ability to pay for, insurance cover might also come under pressure.

In Pioneer’s experience, however, the converse is true. The best mobile operators, keen to retain the trust of their clients, have a big incentive to maximise the use of their equipment and reduce downtime by avoiding accidents and errors that lead to claims. In this environment, mobile operators need effective insurance cover more than ever to win and retain contracts.

Given the potential for substantial claims costs, Pioneer works closely with mobile operators to understand how their business operates and what importance they place on health and safety. Most claims come under the banner of fire, often electrical, or impact and are nearly always linked to human error or risk management failures. Put simply, clients that insist on high risk management standards are less likely to suffer human error related attritional losses and are likely to claim only when there is an unforeseeable catastrophic failure.

A good example is in the area of fatigue management, which is vital for the effective operation of large mobile equipment. Clients that take it seriously, for instance using retina sensors to monitor drivers falling asleep, are more likely to be able to get cost effective high quality and responsive insurance cover.

Given the importance of risk management, there are distinct advantages for underwriters that choose to focus their portfolios in regions, such as Australia, that benefit from a robust regulatory / control environment. That said, knowledgeable underwriters are able to provide effective insurance cover to clients operating across the world, irrespective of the level of local regulation. Detailed understanding of each clients operational and risk management practices enable underwriting in these locations. In many cases, a multinational company’s home regulatory regime and shareholder demands means they take the same approach to risk management and staff training at their overseas locations as they do at home, often moving the same staff overseas, to guarantee compliance.

Insuring contractors, working on behalf of mine owners, does not generally include business interruption insurance. There is, however, the potential of increased cost associated with contract fulfilment, for operators in the event that they should need to rent alternative equipment as a result of damage or destruction of their mobile equipment. This is an important additional source of potential claims cost and one that needs to be considered by underwriters.

Risk selection in this complex operating environment is critical. Thus Pioneer’s underwriters take the time to get to know their clients personally and understand their business. Pioneer’s mobile contractors division is client facing, but is also rooted in strong broker relationships, and actively assists brokers in building their specialist sector knowledge of mobile contactors.

The nature of the commodities business means the Pioneer team dedicates itself to understanding the market it operates in, to deliver the insurance products clients need to allow them to operate successfully in this often challenging sector.

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