Top Ways Waste Companies Can Keep Insurance Premiums AffordableTop Ways Waste Companies Can Keep Insurance Premiums Affordable

It looks like 2024 will go on record as the worst year for fires at waste and recycling facilities as operators continue struggling to stay on top of streams that are rapidly growing in volume, complexity—and risk. The ongoing issue is sending property insurance premiums through the roof.

As waste pros are discovering, even finding insurance at any cost can be hard—or at least finding a single carrier that offers full coverage is tough.

Waste360 sat down with insurers and a fire suppression technology supplier to learn how companies in this high-risk space can avoid catastrophe and keep their premiums affordable.

Falling back on insurance to recoup costs is reactionary. Rather than spend for the maximum coverage, facility operators should invest in fireproofing technologies and protocols to reduce events and save money, says Will Denbo, president Commercial Insurance Associates (CIA).

His clients typically get back what they spend on upgrades in about two years, as measured in insurance rate reductions.

“So why invest that extra on insurance when you can invest in your facilities and not only mitigate fire risk but improve your overall operations?” he says.

Spend on good equipment for starters. That would be systems with heat-sensing cameras that detect hot spots in piles and trigger the release of water or fire suppressants. Coupled with alarms and robust, well- maintained sprinkler systems, the technology goes a long way in preventing disasters. 

At least as important are good housekeeping practices and staying keenly aware of what is transpiring in the facility no matter how much else is going on.

Training is paramount, especially given that human errors cause more than 90 percent of fires in this business. Building a team well versed in identification, fire prevention, and extermination is really the best practice available today, says Nathan Brainard, regional vice president of Insurance Office of America.

“Spotters at the pit or on the tipping floor need to be trained on what to look for just as sorters must be trained on how to quickly identify and remove certain objects from the stream as they pass by their station,” Brainard advises.

Denbo reiterates: The safest businesses tend to be the most profitable. And focusing on human behavior and safety training at the same level you prioritize profits is the way to stay in the black.

Teach staff first to look out for lithium-ion batteries, which is not as easy a job as it may sound, say insurers. They come in multiple sizes and shapes with new and more powerful options fast evolving, along with exponential growth in the products they power. Dubbed as the bane of transfer stations and materials recovery facilities, batteries cause about 50 percent of these facilities’ fires, and they usually happen on tipping floors. All it takes is for a front-end loader bucket to hit one lithium-ion battery in the pile; it explodes and starts an immediate fire.

The fact is that good operators have fires, but bad operators have more of them, says Ryan J. Fogelman, vice president of Fire Protection Services, Fire Rover. The company makes fire detection, prevention, and suppression equipment.

He and his team are on pace to put a fire every day in 2024.

Insurers expect these events. But getting their buy in is not too hard if they see operators are proactive.  Among details they look for are documentation that facilities meet or exceed building codes for their occupancy. 

They want to know metal and battery recyclers, especially, are meeting NFPA 855 requirements (requirements for mitigating hazards associated with energy storage systems).

The more data and facts you present to insurers the better, Fogelman says.

Many of Fire Rover’s largest clients self-insure the first tranche of their property, plant, and equipment. Since they may be willing to absorb some of the loss themselves, the market opens up for them.

“For those companies that are not in that position, my best advice is to get your ducks in a row before you meet with your agent.  Make sure the insurer knows your operational best practices and any investments you have made and plan to make in your business,” Fogelman says.

“Sadly, the most common question we get from folks owning waste and recycling facilities is, “Are you able to get me insurance for my property?” Brainard says.

Since few single carriers offer the required full level of coverage these days, he often has to divert to plan B.

This alternative is known as layering where several carriers each provide a specific amount of coverage that can be aggregated to obtain the full amount needed. It may take four or five carriers each putting up a share to get $20 million worth of insurance on a single building.

Brainard sheds light on the best fire mitigation practices to couple with technology and training. Top of the list is stacking of bale heights and width between bale rows, especially with plastic bales because they spontaneously combust.

Due diligence to ensure the sprinkler system’s efficiency is critical too.

Operators can run flow tests to ensure they are up to par, and they should have them expected annually.

Brainard cautions that while fire departments inform facilities they need a sprinkler system to pass code, they may not tell them all they need to know.

“Operators may not know if their system has the capacity or sprinkler head size for their occupancy. So, they have a fire, and it turns into a large steam bath rather than puts out the fire.

“We give our clients support so they know the system is adequate and functions to ensure safety, and so they get credits with their insurance company to reduce their premiums,” he says.

Getting and keeping good, affordable insurance may require less hoop-jumping in time.  For about the past 12 months, lending institutions have begun to realize the issues facing the industry and are working with their borrowers to address them.

Meanwhile, fire risk has become such a hot topic that waste companies are doing more on their own—namely investing capital to mitigate risk.

Says Denbo: “Fires will continue to persist until we can figure out better ways to get lithium-ion batteries out of the waste stream. But I think people will get better because they want to and are becoming more aware.”