Even as the California Department of Insurance approves new coverages for businesses involved in the cannabis industry, many participants in the state are still in limbo about how to write marijuana coverage.
“The unfortunate part of the cannabis question is there are still many unanswered questions,” said Ron Abram, CEO and president of the managing general agency (MGA) Abram Interstate Insurance Services. “Very few participants are writing the business, [and there’s] a lot of concern about the federal regulations relative to the state agreements.”
Though recreational marijuana became legal in California on January 01, many counties are still not participating. Placer County, for instance, prohibits cultivation, manufacturing and retail activities related to medical marijuana, whereas the nearby city of Sacramento does not, and its dispensaries are able to sell recreational marijuana.
“You think California would’ve been a blanket approval, but even though it’s a very liberal state, there’s a lot of concern about, where does the money go, who manages the conflict between federal regulations (that still has it as a schedule 1 drug),” said Abram.
That makes the job of potential commercial cannabis insurers more difficult.
“The question relative to claims is what are the most common and you can’t even begin to answer that because there’s no real commonality yet, it’s still very fragmented,” explained Abram.
Of course, the MGA doesn’t just focus on marijuana – far from it, with its beginnings selling equine and mobile home insurance products, and now offering a full range of personal and commercial lines insurance. The agri-business is one area of focus for Abram Interstate, which saw the agricultural devastation caused by the wildfires last year, though the sector remains a growth space.
“The fires last year took a toll on many of the winery operations, which of course are concentrated in the Napa, Sonoma area where fires were pretty destructive,” said Abram, adding that despite this, “there’s a wealth of market opportunities. More and more carriers are viewing that space as productive and profitable.”
Cyber is another growing field of opportunity, and one that the CEO and president said can impact the small companies as much as the large ones.
“There’s a bigger exposure perhaps to those smaller companies that are equally being attacked now and people are just unaware of it. They might not even find out about it until down the road. For a small company or a medium sized enterprise, that becomes super detrimental and so coverage becomes way more important than it ever has been,” said Abram. “The black web community has become more and more sophisticated, realizing that the larger company can put stuff behind it. While there’s certainly aplomb if they can break it, there’s a lot of little companies they can get in that aren’t as well protected. You add it all up and it could be as big as an opportunity as a larger one.”