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SOUTHAMPTON, Bermuda-A mutual insurer covering material damage and business interruption risks for the global mining industry is being formed in Bermuda.
Mining Insurance Ltd. will be backed by Centre Reinsurance Co. Ltd. and will have initial capital of $250,000, said Geoff Saunders, chairman and chief executive officer of Windsor, England-based Strategic Risk Management, which will be the managing agent for MIL.
MIL is establishing a reinsurance program for the facility that will provide about $300 million in underwriting capacity, said Mr. Saunders, who announced the insurer's formation at Bermuda Insurance Symposium III last month.
"Mining companies don't need more capacity because there is enough out there anyway. What we need to do is harness the available capacity and work with the reinsurers to create core products," he said.
Currently, mining companies buy coverage not specifically designed for the complex needs of mining facilities, he said. As a result, many policy disputes arise due to the non-specific wordings of general insurance contracts, he said.
The facility will likely attract $25 million to $30 million in premium in its first 12 months of operation, he said.
A critical mass of 25 to 30 mining companies from around the world have already committed to the project, Mr. Saunders said.
Mr. Saunders established SRM after working for 27 years in the risk management department of mining conglomerate RTZ P.L.C. in London. Centre Re owns 51% of SRM; management owns 49%.