Fires, gaps in cover and increasing risks: The German recycling and waste management industry is under increasing pressure. A new study shows how the insurance situation could jeopardise the development of a functioning circular economy. Industry representatives are calling for urgent political measures.
While politicians and industry are pursuing ambitious goals to promote the circular economy, the companies that are supposed to support it are facing existential difficulties. As a recent study by the Federal Association of German Insurance Brokers (BDVM) shows, the waste and recycling industry is one of the sectors most affected by an acute insurance crisis. Two thirds of the insurance brokers surveyed see serious problems with the insurability of the industry - a figure that is hardly matched by other sectors of the economy.
High risks, declining capacities
Insurance capacities for elementary risks such as fire, explosions or natural disasters have been shrinking for years. New investments, for example in photovoltaic systems or charging infrastructure, are considered additional risk factors in many cases. The consequences are drastic: rising premiums, higher deductibles and stricter conditions are a burden on companies - in an industry that already operates with complex risk profiles.
„Key economic sectors such as waste management and recycling are particularly affected,“ warns BDVM President Thomas Billerbeck. „If companies can no longer find sufficient protection, this jeopardises the entire business location.“
Lithium batteries exacerbate the situation
Incorrectly disposed lithium batteries pose a particular risk. Fires in recycling plants and waste disposal vehicles caused by damaged batteries have been on the rise for years - despite increased fire protection measures and the expansion of automatic extinguishing systems. According to Eric Rehbock, Managing Director of the German Association for Secondary Raw Materials and Waste Management (bvse), the risk of fire in the industry has increased tenfold in recent years.
Particularly problematic is the increasing quantity of disposable battery-powered e-cigarettes that are disposed of without regulated take-back systems. According to estimates by the bvse, this amounts to around 80 million units per year - an additional risk factor for fires and damage.
The consequences are serious: many recycling facilities destroyed by fires are not rebuilt due to poor insurability. The result: gaps in the regional waste disposal infrastructure, which ultimately also jeopardise the implementation of the national circular economy strategy.
Political solutions required
The recycling industry sees an urgent need for action. In a press release issued by the bvse, industry representatives demand, among other things:
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the introduction of a battery deposit,
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manufacturer-financed fund cover in the event of a claim,
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mandatory labelling of batteries,
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a ban or at least a deposit system for disposable e-cigarettes.
In addition, incentive systems are needed for the safe return of devices with lithium-ion batteries. This is the only way to make the risks involved in disposal manageable - and to better insure recycling companies.
„Without safe and insurable disposal structures, the transformation to a circular economy will not succeed,“ emphasises Eric Rehbock. Preventative measures alone are not enough if they are not honoured by insurers and not supported by politicians.
Time to act
The BDVM study makes it clear that the insurance gap in the recycling industry is not a temporary problem, but a structural risk. A functioning recycling system - the cornerstone of any circular economy - can only exist if companies are also insured in the event of damage.
„We must not allow the backbone of the circular economy to be thinned out by unacceptable risks,“ warns Rehbock.
Source: Communication from the German Association for Secondary Raw Materials and Waste Management (bvse)
