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Russian mine blast most likely uninsured: experts


MOSCOW—The Siberian coal mine where an explosion last week killed more than 100 employees was most likely uninsured, insurance experts said.

"Mines are typically not insured in Russia," said Nikolay Galushin, deputy general director at Ingosstrakh, one of the largest Russian insurers.

The main reasons are the rather low margins and high insurance costs - with rates of up to 2% of total insured value if the risk is reinsured in the London market, he explained. Additionally, mining risks are typically excluded from reinsurance treaty policies.

Some exceptions are made for mines that invest in new equipment and where banks are demanding the coverage, he noted.

Ingosstrakh does have several mines in its property portfolio, Mr. Galushin added, but it limits the underground property coverage to between $5 million to $10 million.

Insurers generally tend not to cover Russian and Ukrainian coal mines, said Boris Korchemkin, CEO of Aon Rus L.L.C., part of Aon Corp. "Unfortunately the loss ratio is very bad," he said.

The Ulyanovskaya mine, where last Monday's explosion occurred, belongs to the Yuzhkuzbassugol company, in which Russian steel giant Evraz holds a 50% stake, according to news agency Reuters. Yuzhkuzbassugol's management owns the other 50%.

The Ulyanovskaya mine was opened in 2002, making it unusually new by the standards of Russia's mining industry, Reuters reported.