Jumping into the cannabis market when a big player like Lloyd’s was leaving it in 2015 was not for the faint of heart and yet, that’s when Doug Esposito, of Owen-Dunn Insurance Services, made his move.
“It was more of that business opportunity, that there’s got to be someone filling the gap,” explained the energy/construction and cannabis practise leader for Owen-Dunn, who is also a panelist at the Cannabis Cover event – a multi-city masterclass with one stop left in Los Angeles on May 31.
Since then, and especially in the last few months, the commercial cannabis marketplace in California has undergone some rapid changes, which has left companies looking for coverage.
“In the last year, it’s been that acceleration with the rules and regs coming through,” said Esposito. “That’s forcing them to really look at insurance and risk management like they never had before, even though the state requirements in California are very modest from an insurance standpoint.”
Right now, the coverage choices are limited, according to Esposito. There are only a handful of options for product liability, D&O, and workers’ comp, among others.
“Definitely, there’s not enough products out there because products are going to help coverages increase,” he said. “Rating will get more competitive, but even if you didn’t change the ratings, give me better coverage, more options.”
As the market continues to develop, Esposito recommends brokers learn the cannabis craft, since there’s tons of education to do on this sector, and read the policies carefully because many exclude cannabis. The lack of data on losses also isn’t helping and has made it difficult to price accordingly. Esposito predicts that the store of information will broaden, but until then, there will be “tons of failures,” as with any new industry.
“It’s going to come and it’ll be messy, but it’ll drive best practices,” he said. “It’ll just be really painful for the people who might not be as covered as they could be.”
Doug Esposito will be speaking on a panel about innovations in underwriting and the provider perspective at the Cannabis Cover event being held on May 31 in Los Angeles. Click here for more details and to register.