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Author Archives: Greenpoint

Contemplating Cannabis Insurance? Questions Every Insurance Carrier Executive Should Ask a Marijuana Retail Insurance Broker

Due Diligence:  Insurance Carriers Interested in Insuring the Cannabis Industry

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.   

7 questions to ask if you’re contemplating this segment:

  1. What types of losses has the retail insurance broker is experiencing in their book of business?   Why did those losses occur?  Loss ratios? 
  2. What types of incidents or underlying issues could give rise to an insurance claim or other types of litigation?  
  3. What processes are used by the retail insurance broker when forming a relationship with the client to procure insurance?
  4. What particular policy forms, warranties, and other conditions are particularly challenging or relevant when insuring cannabis companies?
  5. What has been your experience using surplus lines brokers and/or underwriter representatives?
  6.  What particular underwriting representations, requirements, or expressed obligations are being made by surplus lines brokers or their representatives that may be problematic from a legal perspective? 
  7.  What suggestions do you have that would be mutually beneficial for all parties involved in the insurance procurement process and ongoing contractual performance by the insurance carrier? 

The size of California’s legalize cannabis industry will easily surpass Colorado and Washington

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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Cannabis Product Liability Insurance Carrier Declining Applicants who Manufacture or Distribute Foreign Made Vape Pens

©2016 Copyright All Rights Reserved The latest underwriting requirement from a major cannabis product liability insurance carrier has them saying no to cannabis companies that apparently manufacture or distribute foreign vendor products such as vape pens.   The majority of the cannabis industry most likely buys vape pens from China.  Essentially, the insurance carrier is… Continue Reading

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Considerations when Buying Marijuana Insurance from Attorney Bob Hoban

Considerations when Buying Marijuana Insurance from Attorney Bob Hoban

Use an Experienced Insurance Agent when Purchasing Cannabis Commercial Insurance In this video, cannabis business lawyer Mr. Bob Hoban from Hoban & Feola, LLC offers his perspective for cannabis business owners on procuring the right types of business insurance.  Mr Hoban suggests starting with an experienced insurance professional that specializes in the marijuana industry.  … Continue Reading

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Washington I-502 Cannabis Licensees Not Required Statutorily to Buy Product Liability Insurance

Washington Liquor and Cannabis Licensing Board Provides Guidance  The Washington State licensing department has confirmed with Greenpoint Insurance Advisors, LLC after our request, product liability insurance is not required for I-502 licensees.  Washington Liquor and Cannabis Board licensing representative indicated the following :  The statutes do not require a marijuana business to have product liability… Continue Reading

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More Pot Consultants Being Asked to Prove Are They Insurance Worthy

But, proving the right type of coverage exists can be difficult  There are many consultants in the cannabis industry who offer professional services when their advice as a consultant is relied upon by others.  They could offer advice for testing, cultivation, and compliance.  Historically, the need to prove these consultants were insured was overlooked either… Continue Reading

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Don’t Test Your Cannabis? Product Liability Insurance Carriers Will Just Say No

Testing Required for Product Liability Insurance  The majority of cannabis product liability insurance companies now require their applicants to test their product.  This means your cannabis product has been tested at an independent lab or possibly in-house depending on the insurance carrier.  If you don’t test your product, the insurance carrier will decline your insurance… Continue Reading

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SETTLED! Lawsuit Against Insurance Carrier Over Pot Plants, Bad Faith, and Breach of Contract not Going to Trial

 THE GREEN EARTH WELLNESS CENTER, LLC , Plaintiff V. ATAIN SPECIALTY INSURANCE COMPANY, Defendant Avoids Trial ©2016 Greenpoint Insurance Advisors, LLC A lawsuit filed by Green Earth Wellness Center LLC (“Green Earth”) against their insurance company has been settled according to court documents.  The original complaint filed by Green Earth sought relief for breach of… Continue Reading

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Insurance Carrier Offering Pot Product Liability Insurance Downgraded

Knight Specialty Insurance Company Receives B++ Rating A.M. Best has recently downgraded Knight Specialty Insurance Company (“Knight”) from  A- (Excellent) to B++ (Good) .   Knight is an insurer of product liability insurance to the marijuana industry through a California based Excess & Surplus Lines Broker.  The press release does not indicate any concern for the risks… Continue Reading

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Are you Covered or Not Covered for Product Liability on your Existing Cannabis Insurance?

Are you Covered or Not Covered for Product Liability on your Existing Cannabis Insurance?

EXCLUDED is the Ultimate Buzz Kill for Product Liability  A review of typical commercial general liability insurance policy in the cannabis industry will most likely reveal product liability is not covered by the insurance carrier.  You might be thinking I thought I was covered if someone sued me after smoking my weed.  Most likely not… Continue Reading

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Departure of Cannabis Insurance Carrier Leaves Current Customers Shopping for Coverage

Increasing your Current Coverage will mean Seeking a New Insurance Carrier As previously reported, Mesa Underwriters Specialty Insurance Company (MUSIC) not only is exiting the cannabis industry, but no longer offering endorsements or changes to their existing policy holders.  MUSIC had been a cannabis insurance provider in different geographical markets for several years.  Their decision… Continue Reading

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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.

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