Mining Insurance In Light of Recent Tragedies

With the recent tragedies in West Virginia mines, A.M. Best’s BestWire Services online news interviewed mining expert Roger Hermann, a senior vice president with broker Aon Natural Resources, about mining risks, the different liability coverages offered to mining companies and the frequency of fatalities in the industry.

We’ll summarize the article below:

Hermann discussed the insurance companies that take mining risks, including the largest insurer currently underwriting coal mines, American International Group, Inc. (AIG), which is also the largest commercial insurer in the country.  He said that following AIG are Chubb & Son. After those two, there are not, according to Hermann, other large insurers who take on mining risks. As far as smaller insurers, he mentioned Old Republic Insurance Co., Rockwood Casualty, and American Mining.

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An Interview with
Kathy Burke
from the Lexington, KY Office

How long have you been with American Mining?
6 years.

What did you do before working here?
I worked in the payroll department for Appalachian Regional Health Care for 7 years. Their corporate office was in Lexington—they downsized and I lost my job there. They had a lot of hospitals and clinics.

What's your average day (or week) like?
It really depends on the day. I answer phones, do first reports of injury, pay bills, when checks come in I sign them and match them up to the claimant statements and send them out. I take care of supplies for the office and stamp the mail in.

Do you deal with claimants?
Yes. I find out what they need and if it is something I can help them with, I help, if they need an adjuster, I transfer them to an adjuster. Every now and then, you get someone that’s really unhappy, but most folks are really nice. And when someone is upset, I try to put myself in their position—they may have had some benefits cut or are having trouble getting medication or want to use a doctor that isn’t in the network. They’ve been injured at work and they want to get better so they can get back to work. That’s what we want too.

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AMIC MOVES UP TO CLASS VI

Although AMIC’s 2005 Financial Statements have not been fully completed, it is known that policyholders’ surplus will exceed $27 Million as of December 31, 2005.  This puts the Company in the CLASS VI financial size category in the A.M. Best rating system.
Going from CLASS V to CLASS VI is an important milestone for AMIC.  Many Umbrella carriers require a company to be at least CLASS VI before they will write Umbrella coverage over the Company’s underlying primary policies.  Also, most assigned risks pools require that a company be at least a CLASS VI size to be a servicing carrier.  Here are the Best Financial Size Categories:

Financial Size Category                                 Policyholders’ Surplus (in Millions)

            CLASS I                                                          less than 1
            CLASS II                                                        1  to 2
            CLASS III                                                       2  to 5
            CLASS IV                                                       5  to 10
            CLASS V                                                        10 to 25
            CLASS VI                                                       25 to 50
            CLASS VII                                                      50 to 100
            CLASS VIII                                                    100 to 250
            CLASS IX                                                       250 to 500
            CLASS X                                                        500 to 750
            CLASS XI                                                       750 to 1,000
            CLASS XII                                                      1,000 to 1,250
            CLASS XIII                                                    1,250 to 1,500
            CLASS XIV                                                    1,500 to 2,000
            CLASS XV                                                     2,000 or greater             

click here for larger graphs