Insurance Program Results

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Cannabis/Marijuana Risks: Market Shakeup

Crittenden Insight

Rankings: Cannabis/Medicinal Marijuana Dispensaries

(Sorted by Current Book Size)

Carrier

Extent of Coverage

Coverages (Limits)

Notes

Crittenden Customer Service Rating

Lloyd’s of London Insurance Co.

Recreational, Medical

Crop per Policy ($1.5 million), Property ($3 million), Product Liability, General Liability, Professional Liability, Excess

Formerly the leading carrier in this segment but suddenly exited. Is currently honoring remaining policies until their expiration.

4 Stars

Hannover Re Ltd.

Recreational, Medical

Property ($10 million), Crop per Location ($5 million), Product, Professional, General, Excess, Business Auto, Lessor’s Risk

Likely to take up majority of Lloyd’s business following its exit. Offers highest limits in this segment.

5 Stars

Beazley Insurance Co. Inc.

Medical

Cyber Liability ($1 million)

Partnering with Hannover Re. The only provider for cyber liability in this segment.

5 Stars

Hartford Steam Boiler Inspection and Insurance Co.

Medical

Equipment Breakdown
($36 million)

Partnering with Hannover Re. The only carrier known to offer equipment breakdown coverage in this segment.

5 Stars

United Specialty Insurance Co.

Medical

Product Liability ($1 million/
$2 million)

Not seeing much business since product liability on medical marijuana products is only required in two states.

3 Stars

James River Insurance Co.

Recreational, Medical

Property, Crop per Policy, General Liability

New to this market. Writes only a small amount of business. Not competitively priced.

3 Stars

Kinsale Insurance Co.

Medical

Property, General Liability

Not seen as competition by other carriers.

1 Star

Markel American Insurance Co.

Recreational, Medical

Property, General Liability, Excess

Does not have a broad coverage product. Small carrier in this market and not actively competing for business.

2 Stars

Scottsdale Insurance Co.

Medical

Property, Crop per Policy, General Liability

Known to provide coverage but not writing much business.

2 Stars

 

With Lloyd’s of London stepping away from the cannabis market, the carriers that remain will modify their programs to pick up business that’s left behind. As many as 2,000 legal cannabis accounts could be in play as Lloyd’s starts to nonrenew business. The focus of the more aggressive programs will likely be on offering higher limits.

Lloyd’s was the leading carrier in this segment, covering both medical and recreational marijuana risks. It exit came at a time when the insurer also faced competition but was apparently unwilling to expand its capacity. And while Lloyd’s program was comprehensive, the limits it offered were considered adequate for the marijuana market as it existed three to five years ago. Lloyd’s limits stood at $1.5 million for crop per policy and $3 million for property liability per policy. Its minimum premiums were also on the higher end at $750 for general liability. Lloyd’s official memo indicated it would no longer support the marijuana industry until the drug was legalized on the federal level.

Some MGAs worry that Lloyd’s exit could scare away prospective players from entering this market, but the marijuana industry is rapidly growing and in need of greater capacity. Smaller carriers writing this business, such as James River, Kinsale, Scottsdale and Markel, will likely to move to pick up some of Lloyd’s sloughed off business. Crittenden believes that Kinsale may also venture beyond medical marijuana account to write recreation marijuana risks.

Hannover Re will likely emerge as the leading player in this market with Lloyd’s out of the picture. The Hannover Re program is considered the most comprehensive in the industry and many insured’s were favoring the Hanover Re program over Lloyd’s. Hannover Re offers limits of up to $10 million for property liability coverage per location and limits up to $5 million for crop per location. These limits are considered adequate. Hannover Re’s minimum premiums start at $500 for general liability, property, crop and $1,000 for excess. The program is written on ISO forms on the paper of International Insurance Company of Hannover SE. It is approved in all 50 states.

The Hannover Re program also caters to smaller businesses by allowing coverage to be written monoline. Other insurers are beginning to recognize that smaller mom and pop businesses are the core contributors to the growth of the recreational marijuana industry. The Hartford Steam Boiler Inspection and Insurance Co. also partnered with Hannover Re to provide equipment breakdown coverage for recreation and medical marijuana manufacturers. Limits are available up to $36 million.

Beazley has begun offering up to $1 million in cyber liability coverage for medical marijuana companies in conjunction with the Hannover Re program. While the medical marijuana industry does not fall under HIPAA, medical marijuana retailers still operate as if HIPAA regulations applied to them. Medical marijuana retailers are encouraged to purchase cyber liability coverage in order to ensure that they fall under HIPAA guidelines when handling patient data.

Crittenden expects constant updates to the Hannover Re product to make it one of the most desirable products in this market. Since the program’s debut, Hannover Re has rolled out various enhancements that insureds requested, including employee dishonesty property enhancement, which covers the property of others, property outdoors and property in transit. Other enhancements allowed for coverage of other classifications, including tobacco stores, paraphernalia stores, laboratories and Cannabidiol projects. Landlords are also beginning to be offered coverage through this program, since many homeowners coverage programs refuse to cover landlords facing exposures relating to growing marijuana. Crittenden expects carriers such as James River and Scottsdale to modify their policies to reflect some aspects of Hannover Re’s broad program.

United Specialty Insurance Co. launched a product liability coverage form for medical marijuana growers during March. Coverage is offered with limits of $1 million/$2 million. This policy would cover marijuana growers for any negative effects caused by the ingestion of medical products. Agents expect that this product will initially be a hard sell since product liability for medical marijuana and recreational marijuana products is only required in Massachusetts and Washington.

While claims submissions generally remain low for this risk, there has been a regular increase in requests for hired and non-owned auto coverage. The growing number of livery requests is related to delivery services or companies that offer marijuana tours in Colorado and Washington. (Copyright © 2015 Crittenden Research Inc.)

 

*The Crittenden Customer Service Rating

The Crittenden Customer Service Rating™ (Crittenden CSR™) was created to provide clients with a simple system by which relative service that can be expected from an administrator may be gauged. Service expectations are generally the same for equally ranked programs. It generally is not a reflection of capabilty to place business.

Miscellaneous Healthcare Facilities

Administered By: Colony Specialty

Distribution: Carrier Direct

Industries:

Ambulatory Surgery Centers (ASCs), Cannabis/Medicinal Marijuana Dispensaries, Dialysis Centers, Emergency Response Services (Ambulance), Home Healthcare, Home Medical Equipment, Imaging Centers/Diagnostic Labs (X-Ray, MRI, etc.), Medical Clinics/Infirmaries, Medical Directors, Medical Labs, Medispas, Non Emergency Transportation (Medical), Nurse/Staffing Registries, Physical Therapists

Carriers: Argo Group US Inc., Colony Specialty Insurance Co.

Coverage: Abuse & Molestation Liability, General Liability, Hired & Non-Owned Auto, Professional Liability

Limits: up to $10 million (Excess), $100,000/$300,000 - $1 million/$3 million (Separate or Combined CGL/PL )

 

Beazley Cyber Coverage

Administered By: MMD Insurance (Next Wave Ins.)

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Beazley Insurance Co. Inc.

Coverage: Cyber Liability

Limits: up to $1 million

CannaProtect

Administered By: Wellness Medical Protection Grp

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Lloyd's of London

Coverage: General Liability, Products Liability, Property

Limits: up to $2 million/$2 million

Hannover Re Recreational and Medical Marijuana Coverage

Administered By: MMD Insurance (Next Wave Ins.)

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: International Ins. Co. of Hannover SE

Coverage: Excess, General Liability, Professional Liability, Property

Limits: up to $10 million (Property)

Hartford Equipment Breakdown Coverage

Administered By: MMD Insurance (Next Wave Ins.)

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Hartford Steam Boiler Inspect. & Ins. Co.

Coverage: Equipment Breakdown

Limits: up to $36 million

Medical Marijuana Coverage

Administered By: Premier Southwest Insurance Grp.

Distribution: Program Administrator

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Scottsdale Insurance Co.

Coverage: General Liability, Property

Limits:

Medical Marijuana Dispensary Coverage

Administered By: Premier Southwest Insurance Grp.

Distribution: Program Administrator

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Kinsale Insurance Co.

Coverage: General Liability, Property

Limits:

MMD/Cannabis Insurance Program

Administered By: MMD Insurance (Next Wave Ins.)

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: Lloyd's of London

Coverage: Commercial Property, General Liability, Products Liability

Limits: up to $5 million

Product Liability

Administered By: MMD Insurance (Next Wave Ins.)

Distribution: MGA

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: United Specialty Insurance Co.

Coverage: Products Liability

Limits:

Recreational and Medical Marijuana Coverage

Administered By: Premier Southwest Insurance Grp.

Distribution: Program Administrator

Industries:

Cannabis/Medicinal Marijuana Dispensaries

Carriers: James River Insurance Co.

Coverage: General Liability, Property

Limits: