As cannabis legalization continues to spread across North America, more adjacent industries are becoming directly involved. Naturally, one of the first of those industries to do so is insurance.
While many people thought that marijuana and the insurance industry would be a tough match, it turns out that claims experiences in the cannabis insurance market has been going well so far.
There is a lot to consider when it comes to ensuring anything cannabis related. When you think about it, it makes sense. Bodily injury could easily be claimed if someone gets injured while high. Failure to warn is a major problem; remember Maureen Dowd? Manufacturing defects, mislabeling and general product liability are all of major concern. Knowing that, insurers need to take a deliberate approach to how they deal with marijuna businesses.
All of that being said, getting in on the ground floor of the cannabis industry has the potential for a major payoff. There are billions of dollars in the marijuna industry, and that number only grows as more states legalize the substance. Any insurer that supports the industry in its infancy stands to make a lot of money as these cannabis industries continue to grow.
This is such a hot topic that the Insurance Journal recently hosted webinar, Cannabis & Insurance, What You Need to Know About the Budding Business, which aired live on May 15. John Donahue, president and CEO of Topa Insurance Co was one of the panelists on that webinar. Top Insurance Co currently offers cannabis products in several states.
Donahue spoke about some of the challenges his company has been facing. “That’s probably one of our biggest challenges,” said Donahue. “We’re a small company, we need reinsurers to provide capacity, and some of the reinsurers have said, ‘Hey, this seems like it makes sense. We’re part of it.’ Others have taken more, wait and see (approach), and others have just out and out said, ‘We’re not going to do it until the federal rules are worked out.’”
Marijunana legalization shows no signs of slowing down. It seems to be less a question of if the federal guidelines will get worked out, and more a question of when. Knowing that, it stands to reason that we are going to see a lot more insurers wading into the cannabis-infused waters very soon.