March 8, 2022
Is your business ready for the new changes and challenges in the cannabis insurance market?
One of the biggest challenges in the cannabis insurance market is getting carriers to come around on the long lists of exclusions that come with the non-admitted markets.
The difficulties coming with wind and hail/roof coverage in many ZIP codes as well as wildfire sub-limits being imposed more than ever before. See recent Colorado fire.
Health Hazard Exclusions and Impairment Exclusions
Those have been readily placed with carriers that offer coverage yet still exclude health losses and loss due to impairment. Which is the biggest issue. Many Agents and insureds are overlooking this and getting questionable policy forms. They are shopping on price because the app is tailored to the Cannabis program.
Thinking out loud, I don’t see health hazard exclusions holding in court. The carriers have the agents and insureds under the impression they are obtaining products liability for cbd/hemp or cannabis-based products. It’s a juxtaposition that needs to be fixed and addressed.
The majority of carriers will approve the product list and labeling yet still exclude health hazards/impairment. This has a lot of us scratching our heads.
Common (Cannabis) Carriers Can Improve Their Policy Forms
There are many areas where the common(Cannabis) carriers can improve their policy forms. As the markets become more competitive and more options are popping up. The carriers are forced to get more competitive not only on rate but mostly coverage forms.
The minimum premiums in these markets go from 7,500 to 5,000. In some cases 2,500 for CBD Hemp. It’s done to paint a picture of the competing options coming in forcing more competitive Minimum Premiums. This has taken a few years but the market is FAST growing, finding a balance of the two costs and coverage can become a challenge.
Audit & Gross Revenues Cause Issues Between Agents and Carriers
Another challenge I see is the audit and gross revenues cause issues between insureds agents and carriers, even with the audit companies. A lot of companies will be turned into collections for delinquent audits as they don’t want to accept rating off gross revenue. Or they do accept that and then when an audit comes around it’s a different story. So, documentation is key for every account.
Understanding the rating basis for the insured’s sake is truly something a lot of Agents or companies overlook and needs to be understood upfront.
There’s a legal gap for a lot of these carriers that will be forced to change the policy forms through lawsuits. Only when it’s too late as they try to get skin in the game but have no experience or context in writing
Cannabis is risky so they use another carrier as a guide.
Lenders included who have high expectations but have to come around or negotiate with carriers to meet lending terms and requirements. Cannabis Insurance is for sure its own animal and ballpark.
So it makes it challenging as these companies are treated high-risk with lots of loss potentials. Lenders are a lot of time yanked around when it comes to insurance.
Finally, lots of insureds think they have a cannabis or hemp friendly policy but are looped in classified as things such as “food mfg” etc. These are empty policies. It must say CBD Hemp or Cannabis somewhere on your policy forms!
Ready to learn more about insuring your cannabis & hemp products? Then contact us at (720) 999-3345 or at info@CannabisInsuranceBusiness.com. You can also learn more about CIB at https://cannabisinsurancebusiness.com/about
Colorado-based and pushing the industry further one step and state at a time. Proudly serving all 50 states.
Pushing the industry further one step and state at a time. Proudly serving all 50 states. – Cannabis Insurance Business of Loveland Colorado
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