5-star Cannabis Insurers: Quality Providers
"We're pretty optimistic about the growth of this particular industry," said John Donahue, president of M.J. Hall & Company, a California-based surplus line brokerage firm. “It is the first emerging market to enter the insurance world for quite some time. Many stand and have remained on the sidelines.
Among those insurers who are still reluctant to enter the industry, many are concerned about the complications and legal risks caused by differences between state and federal laws. But things are changing. Congress recently announced the federal decriminalization of cannabis law, passed by the House late last year but failed in the Senate.
"It is clear that progress on these fronts is needed to strengthen the industry." At the federal level, the government has not sufficiently clarified the contradiction between state law and federal law, ”Donahue said.
This limits capacity in the cannabis world, says Crileen Kixmoeller, vice president of underwriting at James River Insurance, one of IBA's 5-star cannabis insurers.
“I see standard markets that don't write this business as a nationally recognized business until there's legalization at the federal level,” she said.
Challenges and opportunities
Now that the legal aspects of this space are still evolving, what sets a leading cannabis insurance provider apart in today's market? Kixmoeller cites James River Insurance's ability to tailor coverage to the unique needs of each client.“We ask a lot of questions, not because we want to harass our clients, but because we want to do the best possible job for them,” she said, adding that “as an insurer I think the thing is. more important than we must Our offer is our service. Quick response to requests for quotes, quick turnaround time when issuing policies, kindness to each other in handling questions [are all important] - we are all under pressure in this world today. hui. "
Donahue also stresses the importance of customer service and the need to understand all elements of the business - from culture to transformation - as an important indicator of competence.
“When an organization has this depth of industry, it can carry risks that are more difficult to describe and develop larger boundaries to meet the needs of a wider range of underwriters,” he says.
Providing excellent service also means that you are aware of your customers' main challenges. In the cannabis arena, this includes the ability of compressed ownership and over-liability, Kixmoeller says, as well as possible tightening of quality control and testing regulations.
In addition, she says, “Many segments of the insurance industry face an always tough market. It is entirely possible that this will affect cannabis. "
Donahue, on the other hand, sees limited risks and plenty of opportunities. COVID-19 ultimately became a boon to the cannabis space as the state designated essential operations for cannabis dispensaries after the state. And by 2022, he sees that existing legal challenges are likely to give way to more opportunities, as legalization efforts should be successful.
Regarding the biggest problems customers face in this area, Donahue says retail manufacturers are concerned about healing physical injuries. He also saw a tightening of the adoption of protective measures to deal with the flight losses last summer.
“Cannabis is an expensive raw material that can generate significant losses with a relatively small amount of product,” he says.
Kixmoeller urges realtors and space clients to do their due diligence. “Make sure you read the quotes first and that they are complete and contain the information that has been presented that best represents the company,” she says. “It's a lot easier at this point to make changes than it is to try to correct errors or incorrect information in a policy.
And what about cannabis insurance prices? "We are seeing increases in the real estate portion of the premium, which could be the result of the overall market, as well as first party losses that have plagued the industry over the past year," Donahue said.
Kixmoeller notes that “so far cannabis prices have been going down on the passive side, but as I said before, that could change. Other areas of coverage are seeing significant rate hikes due to underbooking, social inflation in juror prices and claim distributions, and low prices for so many years. "
While insurers participating in the cannabis space “are good enough at assessing risk,” Donahue says, he notes capacity is limited. “We see serious capital moving in this space. The facilities are constantly increasing. It is not uncommon to see a statement of value well over $ 100 million. Because reinsurers seem somewhat reluctant to enter the space, capacity is limited. "
What brokers want
Of the hundreds of brokers surveyed by IBA about their cannabis insurance providers, an overwhelming majority (89%) said that policy coverage is paramount when selecting an insurer in this area. A few brokers have noted that while pricing is also important, adequate coverage is essential for cannabis businesses. “It's better to be overinsured in this area,” said one broker, while another said: “The important thing is that carriers have comprehensive policies that provide the most coverage and the most benefits to the customer. ."Almost as many brokers (81%) indicated that service was a critical factor when choosing a cannabis insurer. One broker pointed out that the service includes both underwriting and claims handling, lamenting the latter's current state in the cannabis industry, saying: "Right now everyone is bad." Another stressed that prompt service is paramount: “[Brokers don't want] to wait for a submission deadline. If they have good customer service, they have a good lead time. ”
Insurance expertise is also essential for brokers - 67% felt this was an important factor when choosing a cannabis insurer. For a broker, finding an underwriter who is easy to work with is crucial, while another said they only work with underwriters who have a proven track record. A third emphasized industry knowledge: “In cannabis there are many evolving legal aspects - policies and forms are not always compatible with legalization, so we have to work with insurers who really know what they're doing and what's going on. in industry."
The ability to adjust policies was also an important factor for more than half of brokers (60%). As one broker put it, "Personalization is important because there are so many restrictions on cannabis businesses." Another noted that "the best providers can tailor coverage policies to specific customer needs."
Meanwhile, 56% of brokers said the speed of processing payments / complaints was essential. One noted that most companies outsource their claims, but said the best insurers in this area are those with internal claims teams. Another noted that the processing and management of compensation claims is particularly critical in workers' compensation insurance.
Pricing (considered important by only 37% of brokers), access to risk mitigation partners (26%) and an insurer's online platform (22%) were relatively unimportant for brokers when choosing a cannabis policy.
Methodology
"Market leader" is a phrase that many insurance companies use to describe their products. Today, 10 companies can claim this title thanks to rigorous market research conducted by the people who matter most: insurance brokers.To select the best cannabis insurers for 2021, IBA surveyed hundreds of brokers to gain an in-depth understanding of what insurance professionals think about the current market offering. Brokers were first asked which characteristics they felt were most important in cannabis insurance, and then asked how the insurers they deal with rate those characteristics.
Insurers were assessed on the strength of their relationship with brokers, their ability to process claims, their underwriting expertise and, most importantly, the strength of the individual products they offer.