Environmental and social risk pressures have reached a tipping point in mining and energy insurance, prompting a recalibration of underwriting and investment strategies. According to Najeeb Sachedina (pictured), executive vice president/national mining leader at Purves Redmond Limited, the shift is reshaping how insurers approach two of Canada’s foundational sectors.
“Insurers are increasingly integrating ESG considerations into how they view risk, as well as their investment strategies overall,” Sachedina said. “Between regulatory pressure, stakeholders and emerging risks, it’s shaping decision-making, leading some markets to phase out of certain sectors or withdraw capacity altogether.”
Thermal coal, oil sands and pipeline projects are most affected, with insurers pulling or redirecting capacity in favor of “more greener, sustainable type initiatives and investments,” he said.
While this shift creates friction for resource-heavy industries, Sachedina emphasized the market’s resilience. “Whether it’s California earthquakes, floods or Canadian wildfires… risk dynamics have always been pretty fluid. And yet, the insurance industry remains adaptable and prepared to provide coverage.”
He noted that clients embracing sustainability and responsible practices will be “better positioned to mitigate higher costs and restrictive coverage conditions in this evolving market.”
Canada’s natural resource sector – including potash, aluminum, uranium, gold and diamonds – remains a pillar of the economy. Sachedina dismissed the notion that insurance is becoming unavailable, though he acknowledged that coverage structures have evolved significantly.
“Outside of some industries like thermal coal… the other sectors that affect Canadians and the mining industry as a whole are very much present,” he said. “There’s an abundance of new capacity in the market.”
The shift isn’t about capacity scarcity, but redistribution. Markets that once underwrote large lines of a risk are now taking smaller quota share positions.
“Insurers continue to manage their capacity with an aggregation-focused approach – 5% to 20% – is more common in the sector,” said Sachedina. “It allows the market to continue to participate in this very profitable, but high hazard sector.”
Canadian insurers still see long-term investment in resource risks. “They believe it to be a critical part of Canada’s future… and the industry relies on the knowledge and expertise the Canadian market has to offer.”
For projects outside Canadian borders, especially in politically unstable regions, insurers face greater uncertainty. “Confiscation, nationalization, expropriation and deprivation remain a key concern,” said Sachedina.
He also pointed to mounting risks around supply chain disruption and escalating commodity prices. “Since the only way [prices] seems to be up for most commodities… it’s becoming more challenging to align the appropriate limits to the risk exposure itself.”
Tariffs are complicating business interruption calculations, while aggregate limits are being reassessed due to valuation swings.
Despite inflation, rising interest rates and project overruns, insurers remain engaged, albeit more selectively.
“The insurance industry is adaptable, it always has been,” said Sachedina. “As claims impact profitability, insurers readjust their deployment of capacity to ensure long-standing stability.”
Energy and mining firms – many of them publicly traded – continue to require insurance as they scale. “There is ample new capacity in the Canadian market in addition to capacity that can be accessible overseas. So, while risk management and risk mitigation expectations are rising, insurers remain eager to grow and enhance profitability, maintaining a strong appetite to write business.” he said.
As energy and mining clients move toward renewables and transition technologies, brokers and underwriters must evolve in tandem. According to Sachedina, that requires deeper alignment with client goals.
“To effectively support both established operators and new entrants in the energy sector, brokers and underwriters must remain adaptable – continuously expanding our expertise in emerging energy technologies and evolving risks while providing flexible, customized coverage solutions to the sector.” he said.
He called for the industry to be more proactive in its adoption of sustainability-linked policies tied to ESG performance. That alignment, he added, depends on meaningful engagement.
“The more we can engage with our clients about their business…, actually sit down with them and discuss their evolving risks, … the more knowledgeable we will be as a sector overall,” said Sachedina.
Brokers and insurers who build that expertise, he said, will remain essential partners as the energy sector transforms.
