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With several states including California legalizing marijuana, there has been a renewed interest from insurance carriers considering insurance coverage for cannabis operations. In fact, we most recently had the opportunity to meet with east coast insurance executives eager to learn more about insuring the cannabis sector. This is prudent. Since insurance carriers and their executives should conduct a thorough review of what types of coverages, policy forms, claims versus occurrence, limits, risk appetite, underwriting standards, applications, and distribution model they intend to implement.
In our experience, the insurance executives should understand the precise type of cannabis operation they intend to offer. Will they offer insurance only to licensees, ancillary companies, or to both. What surplus lines insurance broker to consider? In addition, they may want to carefully choose the model of distribution. Typically, the surplus lines broker will offer their cannabis insurance program to every retail insurance broker. This can lead to mistakes as the retail insurance brokers who provides insurance coverage on occasion are unfamiliar with particular underwriting guidelines or policy forms that continually evolve.
For the cannabis industry, the increased interest by insurance companies is good news as they have been plagued by fragmentation, lacking diversity, and void of competition between insurance carriers. Furthermore, the established cannabis insurance carriers and surplus lines brokers may soften their positions and attitudes by the increased competition as some have been rather contentious to deal with.
As such, insurance executives who are interested in offering insurance for the cannabis industry should carefully seek professional and experienced cannabis retail insurance and surplus lines brokers to substantiate their reasons to offer commercial insurance. In our experience, the lack of due diligence may be contributing factor for insurance carriers exiting the cannabis industry as they were unaware of certain risks or distribution channels that were incompetent, negligent, or involve insurance regulators as a direct or indirect consequence.
The legalization of cannabis in California will be substantially larger than the size of Colorado and Washington’s cannabis industry by a significant number. Those insurance carriers who may have insured the cannabis sector in the past, may be reconsidering their decision. For those insurance carriers seeking a rapidly growing industry segment, now may be the time to conduct serious due diligence with professional and competent insurance partners.
DISCLAIMER: Material presented by Owner website is intended for information purposes exclusively. It is not meant for professional insurance or legal advice, to induce or solicit new clients, and shall not be construed as such. Each individual situation is unique and requires a licensed insurance broker or attorney in your state to evaluate and recommend insurance or provide legal advise respectively. Each insurance company, policy, and broker are unique with their terms,conditions, and product offerings placing the responsibility of the user to conduct and rely on their own due diligence. ©2016 Greenpoint Insurance Advisors, LLC
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DISCLAIMER: Material presented by Owner website is intended for information purposes exclusively. It is not meant for professional insurance or legal advice, to induce or solicit new clients, and shall not be construed as such. Each individual situation is unique and requires a licensed insurance broker or attorney in your state to evaluate and recommend insurance or provide legal advise respectively. Each insurance company, policy, and broker are unique with their terms,conditions, and product offerings placing the responsibility of the user to conduct and rely on their own due diligence.