Cannabis D&O insurance: MGU brings new solution to the US market

Part of Aon Programs, this MGU is tackling two challenging markets head on

Cannabis D&O insurance: MGU brings new solution to the US market


By Bethan Moorcraft

Greensite Insurance Services, part of Aon Programs, has launched a brand-new management liability program for the cannabis industry in the United States. Bringing together years of cannabis industry knowledge and insurance experience, Greensite will offer innovative management liability solutions for private entities in the legal cannabis industry, including start-ups and new ventures.

The managing general underwriter (MGU), which is part of Aon Programs, is laser-focused on providing solutions for primary directors and officers (D&O) with limits up to $5 million, employment practices liability (EPL), fiduciary liability, and limits in excess of primary management liability programs. These areas have been largely underserved in the cannabis market to date.

“Obviously, the cannabis space is a challenging market, and the D&O space is a challenging market – both of those statements are true independently. But when you bring them together and you have the cannabis-related D&O space, it becomes a very, very challenging market,” said Dave Zeornes, sales leader at Aon Programs.

“When insurers started writing D&O coverage for cannabis companies in the US, there was some pretty bad claims activity … and the regulations (local, state, and federal) presented a lot of compliance challenges. So, the market was tough to get into, the coverage that carriers provided was limited, and there just weren’t that many insurers offering it. Add all that to the expensive pricing of the coverage … that really made it intriguing for us to really try to help cannabis businesses get real D&O coverage for a more affordable price.”

Greensite was able to enter the challenging cannabis D&O market with a competitive solution by drawing on existing expertise within Aon Programs. For nearly 20 years, Aon Programs has championed the progression of D&O liability insurance across various market segments. Now, the MGU is leveraging this detailed knowledge of insureds’ D&O needs, coupled with its intimate understanding of cannabis specific risks – thanks to its carrier partner Golden Bear Insurance Company, based in California – to offer a unique value proposition to the currently underserved and growing cannabis marketplace.

“When we were developing this, we didn’t just work with carriers on it,” Zeornes told Insurance Business. “We went to brokers who were in the space, and we basically went to school and asked: What risks are you seeing in these businesses and for these business owners and investors, and how are they being addressed today? Some of the best intel we got was from the broker community. Carriers are very good at being stewards of their capital, but brokers are really on the frontlines - and that’s where we got a lot of intel when we put this together.”

Zeornes described Greensite’s target clientele as privately held US-based companies, with less than a billion dollars in revenue, and less than 1,000 employees. He added: “As far as background, we will accept start-ups. We do look at the leadership, obviously the board, who’s running the organization, and really take into account the experience that they have, whether it be in cannabis or outside of cannabis. We will take start-ups, but we are going to look at the leadership and their experience as a barometer for future success, and to ensure that they know how to run a business.”

Some unique elements of the Greensite cannabis management liability program include: coverage written on AM Best “A” rated paper (admitted where available), a broad definition of cannabis, competitive pricing, robust risk education services (including an available hotline), and broad coverage for regulatory hearings – an expense that is excluded by most other carriers in the marketplace.

“We are committed to providing quality coverage and broader coverage than most,” said Zeornes. “One way that we do that on the limit side is by offering excess coverage beyond the normal Side A levels - and we’ll do that over our policy or over another policy. So, if somebody has another policy where they can only go up to $3 million on Side A, we can extend that up to $5 million beyond the $3 million. We’re committed to more coverage from a limit perspective to address our clients’ needs.”

Starting early 2022, Greensite’s cannabis management liability package is now being distributed exclusively through insurance agents and brokers – both in the retail and wholesale markets.

“Brokers will have the ability to come to us directly, and we can do that because we’ve built extensive expertise, and we’ve learned from not just the carriers in the [cannabis D&O space] but the brokers as well,” Zeornes stressed. “In our other Aon Programs MGUs, we sell through both generalist brokers and specialist brokers. The folks who have larger books with us are generally those specialist brokers who, in this case, would be cannabis specialists. So, we look forward to working with cannabis specialists, but we can also help those other folks that might have one or two cannabis risks that need D&O coverage.”

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