Steve Richards of RSM Group speaks with Waste Management Review about navigating waste insurance, as well as how to avoid potential barriers while Pursuing general insurance.
Seeking insurance can be a lengthy process for any business or household. Insurance in the waste industry is no exception, as Steve Richards Senior Account Managers at RSM Group explains.
“Over the past four years the insurance market has become incredibly difficult in the waste sector, we hope to ease some of that hardship,” Richards says.
With more than 36 years in the waste industry, RSM Group has supported the sector, providing insurance broking services to waste operators. Started in 1985 by his father Bruce, Steve along with his brother Tom, have developed RSM’s expertise in the waste industry.
As the chosen insurance broking partner of the Victorian Waste Management Association, RSM Group has extensive involvement and knowledge in the waste insurance sector.
Viewed as a high-risk industry, many operators have had difficulty finding insurance coverage and self-insurance is at record high levels.
Major incidents such as fires at waste collection sites and stockpiles have led to huge insurance payouts, something that Richards says accounts for the high levels of caution from waste insurers.
“The insurance market is experiencing it’s most challenging conditions in decades which has been driven by a surge in claims and reduction in capacity leading to higher premiums. This is expected to change when insurers re-enter markets they have withdrawn from and remediate their portfolios. Businesses should expect the tough market conditions to continue for a period of time and maintain their diligence on risk management,“ he says..
Such incidents have also resulted in tougher regulations for waste operators. The Waste Management Policy (Combustible Recyclable and Waste Materials) was introduced by EPA Victoria in August 2018, outlining requirements for storing waste material.
These regulations ensure emergency management plans, understanding fire hazards, the correct storing of combustible material, as well as the correct documentation of fire risks.
While industry regulations have a reduced effect on general insurer’s, Richards says there can be a disparity between the demands of regulators and risk requirement of insurance companies..
“What the regulators believe, and what insurers say can be very different which definitely creates a level of anxiety throughout waste operators,” Richards says.
Improvements across the sector have been prominent, with operators ensuring that both procedures and equipment exceed industry standards.
Richards explains the need for operators to have an understanding of their own risk profile, which he says is one of the key components in obtaining insurance in waste sector.
“It’s essential that businesses understand their risk and have a proactive approach, insurers often necessitate risk recommendations particularly on the property side of things. This can range from how waste is stored to fire monitoring and CCTV,” he says.
“That’s where we advise clients on what risks they should be insuring, how they should insure it and provide industry leading advice throughout the process.
“We make sure that businesses understand their own risk before they even consider approaching insurers.”
High levels of risk throughout the waste sector has created a large supply and demand gulf, with less insurers confident to cover the growing number of waste operators who require insurance. This has been further impacted by the global insurance market reducing capacity which requires multiple insurers or ‘co-insurance’ increasing complexity in placement.
Avenues of receiving waste insurance has also become a concern. Most insurers are regulated by the Australian Prudential Regulation Authority (APRA) which gives consumers access to dispute claim resolutions via the Australian Financial Complaints Authority (AFCA). AFCA is an ombudsman that investigate and resolve complaints between the parties in a fair and impartial way. It is a free service to consumers.
Due to the reduced supply of property insurers in the waste sector, there has been a marked increase in the number of insurers that are not regulated by APRA. These insurers are known as Direct Offshore Foreign Insurers (DOFI).
DOFI’s do not have the same procedures of complaint filing or appeal issuing, instead customers are required to file actions in civil court.
While still a reputable service, DOFI’s do not offer the same securities as services through AFCA, something Richards wishes to stress to waste operators.
“There is certainly a place for DOFI’s in the general insurance market, particularly in high risk industries. It is critical businesses are aware of their insurance arrangements as the devil is in the detail,” he clarifies.
“We want to make sure that customers know that they are partnering with a broker who has extensive waste industry experience, that’s what we provide at RSM Group.”