Insurers’ appetite for covering waste and recycling sites has weakened further due to the rise in lithium-ion battery fires in recent years.

Site operators handling waste from households and businesses already faced a challenging insurance environment.

Like other advanced economies, Australia has recorded a rise in waste per capita, according to Australasia Underwriting, a specialist underwriter for complex property and liability risks.

“Public sentiment is driving legislation to ensure we recycle more of our waste,” head of commercial underwriting Alan Brett told insuranceNEWS.com.au. “But the industry suggests that public awareness needs to improve as more contaminants are entering recycling feedstock.

“And the industry is seeing a worrying trend in the increase in fires being started from discarded lithium batteries that end up in the feedstock.

“There have been some significant fires here in Australia over the past 10 to 15 years, which has eroded market appetite, especially from the major insurers, which have restricted their capability or exited the space completely.”

The Waste Management and Resource Recovery Association of Australia has urged governments to immediately address the battery fire risk, warning failure to act may bring dire insurance consequences for the $15 billion industry.

“The reality is that all items with batteries must have a separate safe disposal pathway to get them out of kerbside bins, trucks and facilities that are not designed to collect these potentially incendiary devices,” association CEO Gayle Sloan said.

“Our industry is fast approaching a time when we will not be able to insure our trucks and facilities, which will mean services to the community will be in doubt – and this is not something we say lightly. We cannot continue as is with the rate of fires.”

Mr Brett says the insurance market is limited, with few solutions available for waste and recycling operators.

“We provide a Lloyd’s subscription model delivering Australian Prudential Regulation Authority-authorised capacity and clear cover to the industry,” he said. “There are alternative solutions through unauthorised or unregulated entities, but they present the additional challenge of unknown financial strength and untested policy responses.”

Last month, federal and state environment ministers agreed to strengthen laws around battery disposal as a “matter of priority”.

For brokers with waste and recycling clients, gathering as much information as possible is critical, Mr Brett says.

“We guide brokers to ask their clients the right questions around fire risk management and battery waste management at their locations,” he said.

“We also work alongside our risk surveyors and risk engineers to ensure clients can tackle the problem, allowing clients to reduce their business risk and keep any post-event downtime to a minimum, ensuring they can restart operations quickly and safely.”