Metals recyclers were this week warned of the dangers of insuring themselves with speculative brokers and underwriters.
The British Metals Recycling Association (BMRA) told its members that short-term savings from using such firms could lead them to disaster within two years.
Insurance has become hard to secure for many in the scrap metal trade due to the recycling sectors poor health and safety record.
And the BMRA has worked hard to counter this, proving its members credentials through a certification scheme and dialogue with insurers.
But a glut of apparently cheaper offers has recently been received by members of the associations scheme, prompting the BMRA to speak out.
A statement from the association said this week: Suddenly money is coming into the market again, either off-shore or through Lloyds, giving opportunities to quote on the trade.
We have seen quite a few of these quotes and the wordings do not equal our scheme, excesses are much larger, and often the limits of indemnity on public liability are inadequate for our trading purposes, and in some instances future top-ups would not be available.
Underwriters are dipping their toes in the trade. If the water gets too icy they will back out again. This has been the insurance problem for the recycling trade for 50 years.
Insurance underwriters are fickle people driven by reinsurance treaties and claims experience. What applies today does not always apply tomorrow. We can all name insurers that have insured the trade for 15 years and then in 2000 did not want know you.
Rates went through the roof: £5,000 premiums in 2000 became £50,000 in 2001 with huge excesses on public and product liability, and in many cases even employers liability. Underwriters backed out of theft and money covers for the trade, and it was a mess.
Our underwriters want to insure the trade and are happy with giving the wide policy wordings no matter how other underwriters fluctuate with reinsurance and loss ratios. Our ship floats on ripples, not tidal waves.
Small premium savings in 2004 from speculative brokers and underwriters could be the foundation for your lack of insurance from 2006.
We would like to encourage all members of BMRA to join our philosophy and scheme at their next renewal date.