Insurance broker, Gallagher, explains how understanding the regulatory environment can protect a waste management business from reputational and financial disaster.
Risk comes in many forms, from reputational to financial.
In today’s digital world, waste management insurance provider Gallagher notes that reputational risk and the resulting negative backlash from the media and general public has become an ever-present reality. Information sharing via social media means more transparency, authenticity and accountability is required.
Russell Boucher, Principal Broker at Gallagher, says that for Australia’s waste management industry, the risk is higher than most sectors, as the potential damage inflicted to the environment and community increases the stakes.
In some cases, risk management involves statistical and mathematical modelling to determine the likelihood of a liability. When an insurance company assesses premiums, it takes into account the costs associated with property damage, injury, environmental degradation and in the worst of scenarios – death. For more than 12 years, Gallagher has worked closely with the waste industry to provide comprehensive insurance for landfill and materials recovery facility operators, waste collectors and transporters and recyclers.
Russell says that the company’s relationships with industry associations such as the Waste Management Association of Australia (WMAA) and the Waste Contractors & Recyclers Association (WCRA) of NSW has helped it understand the industry, including its expectations and requirements. Both WMAA and WCRA have called upon Gallagher when its members require assistance.
“We represent companies ranging from large garbage contractors, right down to smaller operations, including skip bin operators and compactor operators.”
He says that the industry has faced numerous challenges over the past five years, with an increase in the incidence of waste management fires across the country. As a result, the insurance industry is treading more carefully when it comes to offering policies. Waste companies with up-to-date OH&S procedures and risk management procedures in place ultimately stand a better chance of obtaining insurance and or keeping their premiums to a minimum.
“The biggest difference between now and four or five years ago is the underwriters are asking for more risk management technologies,” he explains.
“Hose reels, fire extinguishers and sprinkler systems are all standard technologies found in many waste facilities. But more recently, we are increasingly finding that the insurance companies are asking for more. Back-to-base alarm systems, smoke alarms, spark arrestors and LED lighting to replace fluorescent lighting are just a few technologies insurance companies are now asking for.”
The biggest exposure, Russell says, is companies taking out inadequate levels of coverage.
“A number of organisations don’t have risk management standards in place. Because they’re not part of an industry association, they don’t necessarily understand the complex regulatory environment they are working in,” he says.
One of Gallagher’s key points of difference, Russell explains, is covering pollution incidents or environmental damage.
“The impact a pollution or environmental incident can have on the public can be major, and litigation or even a class action lawsuit can result.”
He says that in the worst of cases, small businesses could be forced to close down, while larger businesses pay a price financially.
“Reputational risk is also a major factor. The state’s Environmental Protection Authorities (EPA) are keeping a watchful eye on the sector, and they’re only going to put more and more emphasis on reducing the carbon footprint. It’s a growing sector, particularly with a greater emphasis on sustainability by governments.”