Takeaways from Our Conversation on Who the Insuring Cannabis Brokers Are

Are most people in the insuring cannabis business merely cannabis insurance brokers in name only – their only client being a cousin who owns a mom-n-pop dispensary in downtown?

Or do most focus primarily on cannabis? Or, perhaps they work for big firms as they build out an impressive base of multistate cannabis operators?

More interesting questions may be: Who are their clients, what are their client’s needs, and what lines of insurance are those clients buying?

To better answer these questions, Insurance Journal created a survey aimed at finding out just who cannabis insurance brokers are, and a bit about their books of business.

The survey ran over two months, and it was highlighted in the bimonthly Insuring Cannabis newsletter and on social media.

For starters, the survey told us that most respondents aren’t just dabbling in this space. Roughly 20% said they are all-in on cannabis (they answered that it’s 100% of their business), while nearly half of respondents reported that cannabis is 50% or more of their business.

The majority of respondents also reported having 30 cannabis clients or more.

Cultivators represented the biggest share of cannabis clientele among respondents, while most said they have a national focus in their business, and a large share of respondents reported working for large rather than smaller firms.

For our latest podcast we spoke about the results of the survey with Jay Virdi, chief sales officer for the cannabis specialty practice group for North America at HUB International, and Charles Pyfrom, chief marketing officer at CannGen Insurance Services, a national provider of insurance coverage for the cannabis, CBD, and hemp industry.

Following are takeaways from that conversation.

Virdi confirmed that it has been his experience inside and outside of Hub that most brokers are all-in on cannabis, and since “specialty” is in his title, it’s not surprising he also feels that is the best way to go.

“A lot of our value differentiation is that there are brokers out there that try to be more of a generalist and are completely out of their wheelhouse when it comes to a cannabis risk,” Virdi said. “So the more you know about something, the more educated you are, the more you can empathize with your clients. I think that’s what really sets true subject matter experts apart.”

Pyfrom agreed: “…the ones who do really, really good jobs and really just crush it across the board have to specialize, I think, in just understanding what the needs are and the needs of an operator can vary by region knowing who’s the big player, who the big markets are, who the other, potentially, broker channel conflicts could be with other people specializing in, and also how many license are really out there for people to go after.”

The survey asked respondents to rank their cannabis clients’ biggest needs on a Likert Scale – “Completely Agree,” “Somewhat agree,” “Neutral,” “Disagree,” “Somewhat Disagree,” “Completely Disagree.”

They were given the following choices: “Better employment practices,” “Risk management,” “More insurance options, and “Affordable insurance.”

“More insurance options” stood out, with nearly 84% saying they “completely agree” that is their clients’ biggest need. Nearly 63% said they “completely agree” that affordable insurance is their clients’ top need, followed by 54% who “completely agree” that risk management is their client’s No. 1 need.

Better employment practices may have been last on this list, however 36% said they “completely agree” it’s their clients’ biggest need, while roughly that same ratio also answered that they “somewhat agree” it’s their clients’ biggest need.

A need we that was not on the list of choices was greater “limits.”

That is one that’s on the top of Pyfrom’s list, saying it’s “the biggest need that we continue to see” on their large portfolio of clients.

The survey also asked respondents to rank in order the lines of insurance most often sold. Most placed commercial general liability as the most sold insurance, followed closely by property. Brokers reported that workers’ compensation was the third most frequent insurance they sell to cannabis businesses. Next were directors and officers, employment practices liability, and last was cyber – more than 60% report that as the least sold line of the six choices.

That jibes with what Virdi has been seeing.

“Traditionally the commercial package, which includes property, CGL and product liability are the main lines of business that are purchased,” he said. “And really because it they’re mandatory in order to operate a business, whether it’s providing a certificate of insurance to a landlord, whether it’s providing insurance to release equipment or even for financing arrangement.

The survey also sought to discover how brokers feel about the market, and whether they expect to have “More, “Less,” or an “Equal” focus on cannabis in 2022.

An overwhelming 88% answered “More” with only a few answering “The same,” or “Less.”

Evidently most brokers are high on the business.

“We’ve seen our business grow and continue to scale alongside our operators and clients we underwrite and place their risks for day-in, day-out,” Pyfrom said. “And the pace of innovation, the number of states that continue to put legislation on the books to become legalized either in a recreational or medicinal fashion, and honestly, the tailwinds from legislative needs over in Washington, I think certainly we’ll continue to catapult this industry forward at a monumental pace that we’ve not seen in any other industry in a long period of time.”

Related:

• Takeaways from Our Conversation on Cannabis Supply Chain Risks
• Takeaways from Our Conversation on More M&As, Cannabis ‘Frappucinos’ on Tap for 2022
• Takeaways from Our Conversation on EPL Challenges in Cannabis
• Takeaways from Our Conversation on Insuring Cannabis in 2022
• Takeaways from Our Conversation on Rare and Minor Cannabinoids

Topics Agencies Cannabis