UK recyclers hit by rising insurance bills

Anthony Clark & Hamish Champ
PRW

Published: May 8, 2014 9:39 am ET
Updated: May 8, 2014 9:44 am ET

Image By: Closed Loop Recycling UK Business Secretary Vince Cable, left, and Closed Loop Recycling's chief executive Chris Dow during a visit to the plant in April.

Related to this story

Topics Sustainability, Recycling

The rising cost of insurance is the “most dangerous issue” facing plastics recyclers in the United Kingdom in the wake of high profile fires, according to Ben Gerry, general manager of Boomerang Plastics.

“We won't quote exact figures but our premium for next year has increased by around 2,000 percent,” he said. “The recycling industry has had an awful time in the press with all the fires but it is always important to understand the causes of fires — we were the victims of an arson attack and are being made to continue our suffering.”

He said his company, based in Tamworth, England, was not negligent, “but we are now paying the price of more 'generalization' in the industry.” Insurers assume all recyclers are the same — negligent and a bit 'tin pot', he said.

“Stipulations from insurers, if you can afford the insurance, are now ridiculous. Most will want storage of materials to be 10 meters from a building and 2 meters from a fence. Imagine what this does to available storage space.”

Mark Whitney, managing director of the CK Group whose CK Plastics Recycling is based in Market Rasen, England, said that recyclers had expected a rise in premiums due to the high number of well-publicized fires in recent months. “However, the magnitude of the increase was somewhat unexpected. 

“I had hoped we could mitigate the cost by shopping around and demonstrating our good performance history, our clear risk management strategies and strict health and safety policies, but this proved not to be possible as there is only one [competitor] left in the market.”

One U.K. company, North West Electronic Recycling in Merseyside, had two fires within a year, A fire at Newgen Recycling, which recycles tires, in January reportedly was visible from space. And a May 7 fire at Thompson Waste in Scunthorpe had fire crews warning nearby residents to keep their windows closed to avoid potential toxic smoke.

Martin Marron, chief executive of Regain Polymers Ltd. of Castleford, said that like Whitney he had anticipated a rise in his firm’s insurance costs. But he said he was disappointed to see an increase of 20 to 25 percent, versus a ‘normal’ hike of between 10 and 15 percent, despite sticking to what insurers wanted.

Marron said when it came to things such as material storage, his company had the required controls in place, but this did not stop increases.

“Talking to some insurers it appears having the word ‘recycled’ or ‘recycler’ in your company literature now makes you too high a risk,” he added. “The number of insurers in the market is diminishing, with several insurers have simply stopped offering coverage altogether.”

Incease in number of fires

A spokesman for the Association of British Insurers (ABI) said his industry “is concerned at the apparent increasing number of fires at waste management and recycling centers. Insurers pay out over 1 billion pounds ($1.69 billion) a year in the U.K. to customers who suffer losses as a result of fire. 

“In many cases the costs of these fires could be reduced, or in fact prevented altogether by effective fire protection or security measures. Insurers take into account a wide range of matters when pricing insurance and a sustained increase in the cost of fire is likely to have an impact for many businesses, including waste management facilities, particularly if insurers perceive those businesses to be at a high risk.”

Damien Hayes, managing director of U.K. retail at insurance broker Waste Insure, said premiums were increasing at a “realistic level” but fewer insurers were covering the recycling market for purely financial reasons: “It’s not about media coverage of recent fires or sector sentiment or anything like that. They are just not making any money.

“Claims don’t tend to be small, and a number of insurers have got burned and subsequently exited the market. Those that remain want to see a company that is an acceptable risk. If it is then it will get terms.”

Hayes said a plastics recycler could make itself more attractive to an insurer by spending money on what he called “risk mitigation techniques.

“Make your business as attractive a risk as possible. Insurers look for things like fire alarms, fire suppression systems, and so on. Yes, alarms and sprinkler systems cost money. But companies should see them as an investment.”

And if an insurer properly explained its requirements a recycler will be in a better position to understand why a premium costs what it does, he added.

Collective action required

Chris Dow, chief executive of Closed Loop Recycling — a Dagenham, England-based company that has stated its goal is to become the world’s largest recycler of milk jugs — believed that joint action was needed to stem the tide of premium price hikes.

“As an industry we need to deal with the issue of raised premiums collectively,” he said. “Firstly, we need to ensure all of the risks are understood and that the appropriate measures are taken to minimize then, whether that be putting new practices into action or installing upgraded technologies. 

“Then, collectively as an industry, we need to be having the appropriate conversations with the insurance industry to instill confidence in the recycling sector to ensure appropriate levels of cover are available at a reasonable price.”


Comments

UK recyclers hit by rising insurance bills

Anthony Clark & Hamish Champ
PRW

Published: May 8, 2014 9:39 am ET
Updated: May 8, 2014 9:44 am ET

Post Your Comments


Back to story


More stories

Image

Report: Brands are falling short on packaging sustainability

January 29, 2015 5:19 pm ET

Packaging in general, and plastic packaging in particular, has a long way to go in terms of recycling, according to a pair of environmental groups.    More

Image

Plastics help Volt hit new target

January 28, 2015 1:54 pm ET

The 2016 Volt, unveiled at the North American International Auto Show in Detroit in January, features a sportier exterior design — GM calls it...    More

Image

FPI joins curbside recycling group

January 28, 2015 11:47 am ET

Foodservice Packaging Institute is joining the board of the Curbside Value Partnership, a non-profit group that works to improve curbside recycling...    More

Image

Agricultural container recycling grows

January 28, 2015 11:42 am ET

Plastic pestitcide container recycling shot up by nearly 40 percent last year, according to new statistics from the Virginia Department of...    More

Image

PC used in academy roof retrofit

January 28, 2015 8:55 am ET

Polycarbonate sheet meets the demands of a “living roof” in a retrofit at the California Academy of Sciences in San Francisco.    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events