OLDWICK: The legalization of marijuana in certain U.S. states, coupled with its expanding medical use, has created an emerging market for insurers.
“Surplus and specialty lines companies are looking to expand their book of business, as well as grow their premiums, by providing coverage for these states’ residents, since marijuana is still illegal on the federal level,” said AMBest analyst Josie Novak.
Raber addressed how growth opportunities match up with the risk appetites of surplus lines insurers.
“It is no surprise to see the surplus lines companies go into this field. They have very defined risk appetites, but they also have very defined core competencies in their ability to price and set terms and conditions on their policies,” said Raber. “This market fits very well with surplus lines companies’ risk tolerance levels. That said, reinsurers are not really ready to step up and provide coverages, so some of the limits that are being provided are on the lower side.”
Blades said he believes the conflict between state and federal laws is an important distinction to make when you are talking about marijuana from a legal perspective, highlighting how cannabis now is legal for recreational and medicinal purposes in Canada. He said: “If cannabis was legal from a federal perspective, it would definitely have an impact on the market, as Lloyd’s syndicates, which operate in Canada, would likely join the marketplace.”[the_ad id=”31605″]