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Insurance costs for waste facility hit £900,000

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By Marc McLean, local democracy reporter
Insurance costs for waste facility hit £900,000

INSURANCE costs for the waste facility in Dumfries have almost doubled to nearly £900,000 – for one year’s premium.

And the excess payment, if Dumfries and Galloway Council was to make a claim, is a further £100,000.

These extortionate costs for the Lochar Moss waste mechanical biological treatment (MBT) facility have been revealed in a new report due to be discussed at the council’s finance committee next Tuesday.

The council requires cover of £10m to protect the waste plant from risks, such as fire, and the annual fee previously cost £468,000.

However, cover ran out at the end of September and council chiefs struggled to find another insurer. A last minute offer of £896,000 – a rise of 92 percent – came in from their insurance broker.

This meant that the council has to dip into this year’s waste budget for extra cash – and also plunder waste budget reserves – to pay the additional £428,000 insurance cover fee.

A report, due to go before councillors at next week’s meeting, reads: “Insurers’ appetite to risk in relation to waste facilities has continued to deteriorate which has resulted in continued difficulties in securing cover for the Waste MBT facility, very high premium costs and restrictions on the level of cover.

“There have been a number of significant fire events at waste sites across the UK recently and, because of the significant losses being experienced by insurers in relation to the waste sector, insurers are increasingly reluctant to provide cover.

“As part of the current annual insurance renewal process, the insurer of the waste MBT facility (Rokstone) indicated that they were unwilling to continue to be the sole insurer of the facility.

“To ensure that appropriate cover arrangements remain in place, officers have progressed a number of meetings with the council’s insurance brokers to seek to identify alternative insurance arrangements for the waste MBT facility, and while this was becoming increasingly challenging to secure, the council did receive one very late offer from Starr Insurance Company on September 29, 2023, to provide insurance cover on a like for like basis, but with a significant increase in premium.”

Starr Insurance Company agreed to the council’s cover value of £10m, including £3.5m of business interruption cover, for the one-year premium of £896,000. The policy also has an excess payment of £100,000.

The Dumfries MBT plant situated is described in the council report as “a key asset” in the council’s waste management arrangements.

The plant handles the council’s residual waste from across the region which cannot be sent for recycling.