Insurers tighten cover for waste firms

The Association for British Insurers has claimed that the market for commercial insurance, including the waste and recycling sector, remains competitive despite repeated claims among underwriters and brokers that cover has dried up.

The ABI told letsrecycle.com that insurance brokers continued to have the expertise and knowledge required to offer appropriate cover to businesses at the best price.

Mounting premiums for property insurance in the waste sector which includes buildings, contents, machinery, and business interruption cover have largely been blamed on a number of serious fires across the country involving bales and piles of recycled material.

According to the Environment Agency, an average of one in every 18 privately-operated waste sites in the UK experienced a fire between 2012 and 2013 a total of 595 fire-related incidents across the two-year period (see letsrecycle.com story).

Criteria

The competitive claim by the ABI comes after insurance firm Miles Smith partnered with a new underwriter to offer property insurance for waste firms under a strict acceptance criteria. Aspen Insurance replaced Catlin as lead underwriter at the firm, after the latter pulled out of the sector in April this year.

Consequently, Miles Smith will operate an A-rated waste and recycling scheme, meaning it has a track record of high financial security. It will begin offering cover at a minimum premium of 15,000.

Waste firms hoping to get insured on the scheme who will also be subject to a pre-quote survey, credit checks, Environment Agency checks, and will have to fully complete proposal forms.

Miles Smith said it had to compare its services to insurance firms that might not be able to meet losses suffered by waste companies in the current climate.

Paul Chainey, chief executive of Miles Smith, said: Comparisons have to be made with unrated alternatives. And, he advised waste companies to examine warranties and conditions put forward by other companies.

Normal

Also reflecting on the waste sector and insurance, John Norman managing director of A-rated underwriting agency Recyclesure said there that it was the norm for cover to start at 15,000-20,000.

He said: Insurance companies have always cast a sceptical eye over the waste industry and in the end some dont necessarily understand it, but thats not a new issue. I dont think anything that drastic has happened in the past year.

Countries like Switzerland and Germany are 20 years ahead of the UK and they have been through all this before. They do not try and penalise through higher premiums, they would rather see that the companies spending their money on improving risk management.

Not profitable

Earlier this year, Catlin took the decision to withdraw from the sector with immediate effect, with senior class underwriter Colin Panzetta arguing the sector was no longer profitable for insurance firms (see letsrecycle.com story).

The move was described as unhepful by Waste Industry Safety and Health (WISH) forum chair Chris Jones, who argued it came across as critical of professionalism in the sector.

But, Alan Tune, an associate director of Butterworth Spengler an independent brokers – told letsrecycle.com Catlin had been entirely logical in leaving the market.

He said: The amount of claims through big fires made them unable to make money. Insurance is for the losses of the few, to be paid by the premium of the many. This doesnt appear to be the case in this market.

Mr Tune said waste companies would need to consider exactly what the insurance they were offered actually covered, such as business interruption cover and profits. He noted that where insurance premiums were lower in the face of the rest of the insurance market stance, questions should be asked.

When contacted by letsrecycle.com, Aspen Insurance declined to comment on its new service.