Insuring Cannabis Summit 2022: Capacity, Rates, Lawsuits and More

Cannabis insurance is a complex and developing space, and ample proof of that assertion was provided at a two-day event in October focused solely on the topic.

Issues like capacity, rates, lines of insurance, lawsuits, and market forecasts were among the subjects tossed around by more than 30 speakers appearing during Insuring Journal’s annual virtual Insuring Cannabis Summit on Oct. 26 and 27.

The event featured panels on cannabis laws and lawsuits, a panel with carriers, insuring cannabis market intelligence, experts tackling tough questions, and a large roundtable panel.

The event was too large to cover completely in the pages of the magazine, so the editors of Insurance Journal have summarized some of the highlights of only a few of the panels below. The conference is available on demand at ij.insuringcannabissummit.com, and video clips of the panels can be found on InsuranceJournal.tv.

Carrier Panel Highlights

A panel of insurance carrier executives moderated by Keith Distel, associate vice president of underwriting for AmTrust Financial Services, laid out the evolution of cannabis insurance and where it’s headed.

Panelists Michael Hall, vice president of the cannabis department for Golden Bear Insurance Co., and Joseph Lyons, vice president of commercial lines underwriting for Conifer Insurance Co., painted a picture of a market that has come a long way — and one that has a long way yet to go.

“When we started, we were trying to keep limits about $5 million, and now we’re up over $15 [million],” said Hall, vice president of the cannabis department for Golden Bear. “But what you’re seeing, I think, especially in the MGA space, is people getting $30-, $40-, $50 million worth of capacity in house. And that’s definitely a new development. I mean, two years ago you were lucky if you could buy $10- or $15 million, and it definitely opened up, especially on the property end.”

Distel asked Lyons if there is more room for carriers in the space, or if it is reaching a saturation point.

“I think my answer to your question would be, ‘Yes, no, and it depends,'” Lyons said. “If it’s a market-driven marketplace versus a state like Michigan or Colorado versus a state like Illinois or Ohio, where you have limited market, capping of license — no, there’s not a need to have more capacity. The pie isn’t big enough for all of us to kind of play in there, to have more people come in. I would say that my answer of ‘No’ would be if there’s another main street carrier that’s going to write, just provisioning centers, there’s not a need for that now … that market is saturated.”

Roundtable Highlights

A roundtable provided the biggest panel of the day.

Charles V. Pyfrom, chief marketing officer at CannGen Insurance Services, moderated a panel that included Jesse Parenti, national director at Nine Point Strategies, Summer Jenkins with Cannabis Insurance Wholesalers, Jon Spratt with Greensite Insurance Services, Kathleen Brown-Hurtado with Curotech Specialty and T.J. Frost with Symphony Grow.

Jenkins talked about the importance of helping to create an environment of culture, safety and accountability for cannabis businesses.

“And then everything else is manage, tweak and continue to be worked on,” she said. “Because this is a space that is going to continue to evolve. And it’s not one piece, it’s like 10 pieces all working together. Communication within your HR, your safety department, your loss control department, your risk manager, your attorneys, your CPAs, we are all on the same page and we have to be communicating to make these businesses successful.”

Parenti discussed a big challenge in the space, which he said comes from the risks posed by alcohol and cannabis together. He is hopeful better sobriety tests will come along to enable brokers to work with carriers to come up with “a product that actually is viable that will provide protection and defense when needed.”

Experts Answer Highlights

Five cannabis insurance experts agreed to tackle tough insuring cannabis questions distributed by Insurance Journal on social media ahead of the conference.

The experts were Stephanie Bozzuto, co-founder of Cannabis Connect Insurance, Beth Medvedev, division manager at James River Insurance Co., Jason Scheurle, national product lead, cannabis for Burns & Wilcox, Alex Buschmann, national cannabis practice leader at Risk Strategies, and Carson Post, senior vice president of underwriting at QuadScore.

Medvedev was asked how insurance professionals get into the business of insuring cannabis.

“I think the most important thing is doing a lot of research first,” Medvedev said. “Cannabis is just like any other product, but there’s so many unique things about it and the way it’s distributed. So even learning about the history of insurance and cannabis, some of the science behind the actual product is really helpful, because as more and more people get into the cannabis market, it’s obviously getting much more full. So, finding some place that there’s a gap, whether it’s coverage or particular service that you can specialize in, would be really helpful. And then I think really just understanding the particular challenges of the cannabis market and figuring out a way to get around those.”

Scheurle was asked how the cannabis insurance specialty compares with other specialties he’s been involved with. He was previously in the special event space, which he said compares with insuring cannabis in some ways. However, the cannabis specialty may be the tougher one to be in right now, he added.

“They are very, very different in their risk profile and underwriting processes,” he said. “Special event is fairly simple. If you have a day and a number of attendees, you’re probably okay to get an indication or a quote.

“Cannabis is very, very different. We’re looking at several different applications and pieces of information to even reach price indication. So, I think when you look at cannabis, the main difference from various other classes is just how difficult and tricky the underwriting can be, especially in the very beginning of the life of the policy.”

Foresights & Intelligence Highlights

A panel titled Insuring Cannabis Foresights & Intelligence for 2022 and Beyond kicked off day two of the conference.

It was hosted by Jim McErlean, business development manager at Cannasure. Also on the panel were Erich Schutz, vice president at Jencap, Jay Virdi, chief sales officer for Hub International’s cannabis specialty practice, and Matt Engle, vice president with Insurance Office of America.

Schutz said “2023 will be a year where claims contract certainty, and accurate and fair law settlements being made is going be really important.”

Virdi, who oversees some 200 brokers who work in the cannabis specialty, also believes ligation is coming to the space soon.

“You know, there’s going to be a lot of lawyers that are jockeying for position or looking for ways to really put themselves out there and attack this emerging space,” Virdi said.

Engle said he believes the evolution of the space will continue.

“Nowadays you’ve got probably five different specialty programs through MGA programs and a host of other carriers both in the E&S and now the admitted market space that are coming into play here,” he said. “So, the evolution of the markets and what’s available from a customer standpoint, from the operator side is getting better. And I would say even on those specialty programs, they’re starting to add some of the management liability lines and your D&O, your EPL, your cyber to their offerings.”