While more states take a look at legalizing marijuana, the cannabis insurance market is expanding to meet the insurance needs of this growing sector, though the availability of insurance products for cannabis businesses is still limited, according to one expert.
“There are a lot of carriers that seem to want to dip their toes into this space, but are cautious given the stigma around it being federally illegal,” said Kevin Maher, senior underwriter at Canopius Group and a speaker at the Cannabis Cover Masterclass Los Angeles in March 2019. “For those carriers that are playing in this space, there are relatively few when you look at the amount of insurance companies that are out there and because there is that small group, it’s relatively limited to what those companies are willing to offer.”
Activity at the state level is nonetheless important since that means regulations are being established, which in turn entices insurance companies to enter the marketplace since it’s less of a Wild West – important, too, for cannabis businesses who need coverage just like any other business.
“Because you have a limited amount of companies that are willing to play in the space, I think they’re beholden to what those companies are willing to offer,” said Maher, adding that part of the problem has also been a lack of education for these businesses around their needs. “They’re getting smarter about it – I think for a long time it was just buying insurance to satisfy some needs – but I think more and more they’re understanding now that they can truly protect their business by buying the coverages that are out there, and that’s why they’re asking for more.”
Brokers are also getting more educated about cannabis insurance, which is critical because if you want to play in the cannabis space, you have to evolve with the industry, Maher told Insurance Business.
“For those that are going to be successful in the space, they have to continue to build up their education and truly understand what’s happening, and I think that’s a two-way street – there’s a lot that we can learn from the cannabis businesses and there’s a lot they can learn from us about insurance,” he said.
As for the key takeaway that the senior underwriter hopes insurance professionals get from the Cannabis Cover Masterclass, Maher said, “Don’t be afraid to ask questions and understand it because the more that we as insurance professionals are educating about the cannabis industry, the better we can then educate the cannabis industry about the products that are out there that they need to best protect their business.”
Take a deeper dive into this issue at Cannabis Cover Masterclass Los Angeles.