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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 to not offer insurance and allow coverage changes for existing insureds came rather abruptly and without reason. Fortunately, MUSIC is not cancelling or terminating existing insurance contracts due their decision. However, current policy holders who may need to add a location or increase their current coverage would likely be denied those requests.
In comparison, when Lloyds of London exited the cannabis industry several years ago, they were able to continue to meet basic requirements from their policy holders that some would consider a standard practice for the insurance industry. Granted, the regulation of the Excess & Surplus lines insurance industry is murky when compared to regulating standard insurance carries such as Farmers, State Farm, and Travelers none of whom insure cannabis companies.
As a result, current customers of MUSIC will need to contact their insurance broker to procure these insurance coverages most likely with additional policies from other insurance carriers. Typically, it doesn’t make sense to cancel a current and active insurance policy in force due to cancellation provisions addressed in most insurance contracts. Besides the inconvenience of additional applications, the limited number of cannabis insurance carriers and coverage offerings could result in additional premium expense, duplicated coverage depending on the circumstances, or inadequate options for the cannabis business owner.
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