Lithium batteries sparked over 1,000 fires across Australia last year. For most insurers, that’s reason enough to avoid the recycling sector entirely. For us at Australasia Underwriting, it’s precisely why we stepped in.
We’ve been experts within the waste and recycling sector for years, developing a deep understanding of the inherent risks and challenges these businesses face daily.
Our mission extends beyond providing coverage. We want to ensure more of Australia’s precious raw materials can be reused domestically, limiting our carbon footprint while supporting a critical industry that often struggles to find appropriate insurance solutions.
Understanding the Unique Risk Profile
The general public doesn’t realize that contaminants like lithium batteries are a daily occurrence for recyclers. This misunderstanding creates a significant gap in the insurance market.
Traditional insurers see recycling operations as high-risk due to fire hazards, machinery use, environmental liability, and regulatory complexity. Many lack the specialized knowledge to properly assess and price these risks.
The result? Recycling businesses face significant insurance costs. This creates an unsustainable financial burden on an industry critical to our environmental goals.
Australia’s circular economy performance is currently limited, with only 3.7% of our economy being circular according to CSIRO research. Without proper insurance solutions, this figure will remain stubbornly low.
Boots on the Ground Risk Assessment
Our approach differs fundamentally from traditional insurers. We deploy risk engineers to facilities for hands-on assessment, ensuring recommendations are realistic, achievable, and practical.
We review EPA licensing, types of waste accepted, shift patterns, public access, and many other factors to build a comprehensive risk profile. This granular understanding enables us to identify risks that others may overlook.
One critical discovery our engineers made involved shift patterns. Vast deposits of stock sitting idle between shifts significantly increase the risk of fire exposure. This insight led to operational recommendations that substantially reduced risk.
Temperature monitoring of stock feed and early intervention through fire prevention measures, such as cannons and sprinklers, prove essential. Equally important is operational management, with contaminants removed and stored away from property assets.
From Assessment to Action: A Victorian Success Story
A mid-sized recycling company in Victoria processed scrap metal, rigid plastics, and electronics. They had experienced a minor fire incident involving mixed materials that were left too close to the processing equipment.
Rather than declining coverage or dramatically increasing premiums, we worked collaboratively with the client. Our assessment identified several fire-related concerns:
Combustible materials were stored within 5 meters of machinery. Fire detection systems were basic, lacking heat sensors or thermal imaging capabilities.
Together, we developed a practical improvement plan: creating a 10-meter buffer between combustible materials and machinery, introducing a pre-sorting station for battery detection, installing thermal imaging cameras, and upgrading to foam-based extinguishing systems.
Within six months, the facility completed 90% of our recommended upgrades. Premium increases were offset by reduced downtime risk and improved loss ratios.
Enabling Australia’s Circular Economy
Our specialized approach to insuring recycling businesses contributes to Australia’s circular economy in several key ways:
By offering fit-for-purpose coverage for fire, contamination, and environmental liability, we reduce perceived financial risk. This enables operators to secure financing, attract investors, and scale their operations.
We help establish baseline risk standards for emerging sectors like e-waste upcycling. These standards influence how operators design their facilities from the outset, creating a more resilient and compliant industry.
Our innovative coverage options support circular business models that involve take-back schemes, reverse logistics, or material-as-a-service approaches. Insurance becomes a strategic partner in innovation, not just a risk gatekeeper.
Advice for Brokers
For brokers looking to better serve recycling sector clients, we recommend several approaches:
Understand the specifics. A plastics processor has different risks than an e-waste recycler or an organics composter. Tailored policies begin with tailored questions.
Be proactive on fire risk management. Encourage clients to invest in thermal imaging, battery detection, and automated fire suppression systems. Brokers who help prevent losses add more value than those who merely negotiate premiums.
Translate risk controls into underwriter language to help clients document their risk management procedures, maintenance logs, and compliance efforts. Well-documented risks often lead to better terms, not just better pricing.
Position yourself as a circular economy ally. Speak the language of sustainability, resource recovery, and decarbonization, positioning you as more than a transactional broker—you’re a long-term strategic partner.
Looking Ahead
In the next decade, insurers who understand circular economy dynamics won’t just be underwriting risk—they’ll be underwriting transformation. This includes helping reduce Australia’s landfill waste, supporting national resource recovery targets, and enabling local manufacturing and reuse ecosystems.
We believe insurance can be a catalyst for environmental progress. By making recycling businesses insurable, we’re helping make sustainability profitable.
The challenges are significant, with lithium battery fires representing just one of many complex risks. But with the right approach—combining technical expertise with collaborative problem-solving—we can support Australia’s journey toward a more circular, sustainable economy.
