This emerging market is rapidly growing strength throughout the United States with legalized cannabis.
The marijuana insurance industry has exploded since certain forms and uses of medicinal cannabis received approval. That said, there have yet to be many participants in this particular part of the market.
Still, there are a few players that have been carving their way into medicinal marijuana policies and coverage.
Even before Lloyd’s of London stepped into – and then departed – the marijuana insurance industry, there was already a firm called New Wave Insurance taking part. It had what it called “seed to sale” cannabis coverage. That insurer is based in San Diego and sells policies for cannabis at various stages of the market. This includes the crops themselves, indoor cultivation, as well as policies for retailers selling medicinal marijuana, the seeds and the plants, and laboratories testing and processing the herbal medication.
The primary perils in the marijuana insurance industry have already mainly been identified.
According to Jeff Ward, CEO at New Wave Insurance, that firm is the only one offering coverage when a product is recalled. That said, the main risks faced by an insurer within this sector appear to be electrical fires and equipment malfunction.
The fires can be caused if the 23 watt bulbs overheat. Those light bulbs are a central part of the growing equipment. Equipment breaking down can also be destructive to a successful venture. Those two factors make up for the largest portion of the losses seen in this insurance industry.
That said, in terms of the biggest exposure for marijuana insurance companies – regardless of whether they’re the plant growers or the owners of the shops – is the inadequate coverage provided by many insurers and the marijuana exclusions that commonly apply, said Next Wave.
Ward stated that “In terms of limits, in terms of forms, we see other markets out there with really poor policy language that, even though they’re allegedly offering coverage, they have a lot of ways to deny coverage.”
New Wave senior vice president of commercial programs, Charles Pyfrom, underwrote the cannabis program for the firm. This brought it into the marijuana insurance industry with a vengeance and set it up on the ground floor of a rapidly growing market. Pyfrom explained that it is “imperative” that new markets such as cannabis focus on clarity in their coverage.
