Takeaways from Our Conversation about Innovative Products and Services for the Cannabis Industry
We’re seeing a number of new cannabis insurance products being rolled out.
Insurers may be gearing up for a potential 10-fold increase in sales to the booming $17 billion-a-year cannabis industry, as Congress potentially inches closer to legalizing marijuana at the federal level.
With any potential boom, there usually a corresponding bang in demand – demand for not only more products and services to support growth, but also for more sophisticated products and services.
Banking, of course, would be among the top requirements to support the cannabis industry’s continued growth, as would insurance and risk management.
There has lately been some new innovations and offerings in the insuring cannabis space. Insurance Journal interviewed some of these innovators about the products and services they’re bringing to the market. Following are a few takeaways from that conversation.
Charles Pyfrom, chief marketing officer of CannGen Insurance Services, talked about a new division CannGen launched in late August called CannGenPRO, which is designed to fill an industry need for management and professional liability insurance.
Under the division, CannGen is now offering Directors and Officers liability and Employment Practice Liability with limits of up to $5 million on a combined or single exposure line basis.
“It’s our newest division specifically focused on the needs of buyers in the cannabis, CBD, and hemp industry on the professional liability, management liability side of the house,” Pyfrom said. “And we’re rolling out our D&O directors and officers and EPL employment practices liability policy last week to make sure that our best in breed solutions are expanded to this much needed cover offering in a general insurance commodity.”
Pyfrom said they spent six months with another proprietary custom trading partner for CannGen working on the new division and new products.
“We were lucky enough to hire away from a large insurance company a very talented senior management liability underwriter with more than a decade of experience in specialized placements to run this division for us, and I’m happy to report that, after all these months of hard work and working with our carriers, our re-insurance trading partners, and our underwriting team, we’ve got lots of resources dedicated to make sure that our valued proposition of top notch service and great response time and coverage and product offering will remain at that same level with our new CannGenPRO division,” he said.
QuadScore has been around as a cannabis insurance company for a little bit under three years. In that time, they carved out a specialty in creating comprehensive insurance solutions for multistate operators.
In June, they launched QuadScore Risk Services.
Matt Johnson, the vice president of QuadScore, explained why they made this move.
“Many of these large multi-state operators have in-house risk managers who can often find themselves stretched very thin when trying to manage a schedule of over 100 locations, and total insurable values in the hundreds of millions of dollars,” Johnson said. “The exposures out there are tremendous, and the larger operators are going to need more resources than one person can provide to keep their business safe.
The idea is that QuadScore Risk Services examine the schedule of properties and casualty exposures operators have from an underwriting perspective and a risk management perspective and design a proposal on methods to improve the organization’s risk profile.
He said QuadScore sees a heightened need to have a risk management focus on the cannabis industry, so much so that they are putting a significant chunk of their time and resources into being able to offer these services to clients.
“As cannabis really enters the mainstream in the United States, they need to play by the same rules as pharmaceutical companies and manufacturers, large agricultural companies as well,” he said. “Any of those enterprises, you’re going to see take a very proactive stance towards risk management to try to keep their operations safe. And we think cannabis absolutely falls in the same vein.”
Rocco Petrill, chairman of the National Cannabis Risk Management Association, a not-for-profit group that started out with a focus on providing education to its members, agreed that risk management needs to be font-and-center for the industry.
“The cannabis industry is definitely in the spot where it needs these products and services,” he said. “What we continue to find concerning is that we’re just not seeing the responsiveness out of the owners and the operators to take advantage of what we’re bringing to the marketplace. So they are going to have to move it up on their priority list in order to be prepared for some of the eventualities that’ll happen in the future.”
In early August, the NCRMA launched an independent risk management company through its National Cannabis Risk Prevention Services arm.
They are offering stand-alone services to companies outside of those they previously only served through their captive.
“What we finally decided is that given this potential threat to the long-term sustainability that poor risk management represents in cannabis, that it really didn’t make sense for us to offer this risk management platform only to those that were interested in our insurance product,” Petrill said. “So what we did is we formed a separate standalone business that is now free to offer the same risk management prevention services to cannabis companies whether they’re interested in the captive insurance product or not.”
Related:
- Takeaways from Our ‘What Makes a Good Cannabis Broker?’ Conversation
- Takeaways from Our Conversation about Cannabis Product Liability Suits Worth Watching
- Takeaways from a Cannabis Half-Year Outlook Conversation
- Takeaways from Auditable Policies and Cannabis Conversation