Waste and recycling – Insurers closing the market gap

In recent years there has been a substantial increase in waste management and recycling firms operating in the UK, helped by the government’s determination to turn the UK into a ‘zero waste’ economy. This rapid growth has thrown up a few issues, most notably price volatility of commodities, as well as fire risks (waste material is susceptible to spontaneous combustion). Insurance premiums shot up as a result of the frequency of the claims and some insurers reduced their capacity to cater for these risks.

The waste sector supported 103,000 jobs in 2013

The waste sector supported 103,000 jobs in 2013

For the smaller companies in this sector, the lack of availability and the rising costs became a burden, particularly with risk management requirements such as sprinkler systems. Another issue, discovered by loss adjustors, was underinsurance. This was highlighted in a high proportion of the claims. A prominent gap in a lot of policies was stock debris removal, as most policies do not recognise waste in its ‘raw’ or converted state, as stock, so the debris removal following an incident was often uninsured. This is then made worse by the additional weight of the water used to put out the fire. This saturation can potentially double or triple the weight of the materials.

The industry is working hard to navigate these issues. The Department for Environment, Food, and Rural Affairs have noted a fall in the risks posed by waste. Illegal sites are being clamped down on, and a lot of work has gone on to improve risks. Some insurers have since added specialisms within this sector, enabling them to quote more attractively for these risks. This is also resulting in policies becoming more bespoke, with loss adjustors working with brokers to ensure the gaps in cover which were commonplace before are eradicated, and the policies tailored to be better suited to the waste sector.

Image sources: 1, 2