BROKER network giant Hub International has launched cannabis insurance and risk services in Canada.
It will be managed by U.S.-based T.J. Frost and Canada’s Phaedra Andrusiak. Mr. Frost told Thompson’s the Canadian cannabis industry is — in many instances — underinsured.
For example, cannabis cultivation operators will buy a property and invest millions of dollars in improvements or buy expensive equipment that requires specialty modifications without insuring according to those changes. “We are sitting down and doing a consultative approach, learning about their business and learning about their risk and how to put insurance programs in place to guarantee their financial future,” Mr, Frost said. “That is what we are focusing on.“We are finding that there are not a lot of experts that are insuring the field . . . we have done this for a number of years now and we are ready when the floodgates open.”
He said Hub has been selling cannabis insurance since 2012.
Mr. Frost said Canadian insurers are still in the process of creating cannabis-specific insurance but Hub is seeing an increase.
“As this new emerging industry comes, one that is still a grey area, the industry’s best interest is to have expert (advice) . . . so the industry doesn’t go away. We want it to succeed and grow — which we feel that it will.”
Cannabis is to become legal Oct. 17.
The new Hub services will provide specialized solutions for medical and recreational cannabis producers, distributors and retailers in all aspects of their operations.
Meanwhile, analyst A.M. Best said it has received varied feedback so far from Canadian insurers on the coming introduction of legalized pot.
“Our initial discussions with managerial teams over the coverage or exclusion of cannabis products and liabilities have indicated generally mixed feelings,” the U.S.-based firm said in a report on the Canadian insurance industry released in advance of a presentation earlier this month in Toronto.
“Some are eager to cover liabilities associated with more traditional commercial aspects of the value chain — such as greenhouses and distribution warehouses — but others remain wary until full implementation and sufficient legal precedence has been established.”
A.M. Best noted that cannabis is a sizable developing market.
“It provides a new opportunity with some unique risks and there will be a need for new or revised insurance products as a direct result of legalization.”
The analyst said a post-legalization world raises a number of quest-ions for insureds and insurers across commercial and personal lines.
One immediate impact may be with the auto liability line of business, A.M. Best said.
“As many marijuana-legal jurisdictions in Canada and parts of the U.S. struggle to refine THC impairment testing, the ability to assess the driving records — and therefore the underlying riskiness — of insureds is subject to considerable uncertainty.”
(More coverage of the A.M. Best report on the Canadian industry is presented in the Sept. 10 weekly edition of Thompson’s. To subscribe, please choose the ‘Subscribe’ tab on our main page or email email@example.com for more info).