Why insurers aren’t yet high on cannabis

The excerpted article was written by By Robert Armstrong

Major insurance providers, including Berkshire Hathaway and Aon, have begun to offer coverage to American companies in the legal marijuana industry, which had long been off-limits due to regulatory or reputational reasons.

However, investors and executives say many insurers remain cautious in their approach, resulting in higher prices. They argue that more widely available coverage is badly needed.

“One of the most miserable things I have to deal with for my job is getting insurance,” says Tim Conder, chief operating officer of publicly traded Tilt Holdings, a Massachusetts-based group that owns a variety of cannabis-related companies and reported $46 million in revenues in the third quarter.

Marijuana is legal for recreational use in Canada and 10 American states and is either decriminalized or approved for medical use in many others. Every part of the business — cultivation, lab testing, distribution and retail sales — requires insurance coverage, from general liability to property and workers’ compensation.

Reliable numbers on the size of the industry are hard to come by, but legal spending on cannabis in the United States was just under $10 billion last year, while cannabis companies attracted $14 billion in funding, according to BDS Analytics, an industry consulting firm.

Neil Hitchcock, CEO of Bermuda-based insurance broker Skyfront, estimates that the legal U.S. cannabis industry would pay about $1 billion in annual premiums were it insured to levels normal for other businesses. The demand means that Skyfront is “incredibly busy,” but “the problem is the limited capacity to take risk” on cannabis businesses in the insurance market, Hitchcock says.

He pointed to Lloyd’s of London, where members of the market are not permitted to write cannabis insurance in countries where the plant is not legal at a federal level — which rules out working with clients in the U.S. The insurance marketplace said last year that it would begin providing coverage to Canadian companies.

Five years ago, insurance was hardly available to the U.S. industry. Things are getting better, stresses Conder. Today, Tilt’s operating companies use insurance from both large providers such as Aon and small specialists such as Cannasure.

But others point to higher prices as a result of the restricted insurance supply. “If your business plan includes the word ‘cannabis,’ expect to pay more,” says Kyle Nichols, president of insurance broker Hugh Wood Canada. He adds that even in a country where cannabis is legal, companies in the industry can pay five to 10 times standard rates.

Kyle Kazan, founder of California Cannabis Enterprises, one of the largest cannabis companies in the U.S., also has extensive holdings in real estate and says his cultivation facilities in California pay double the insurance premiums required for his pecan farms in Georgia.

Kazan says it’s a challenge to find insurers who understand the industry. “You don’t want your local State Farm agent doing this,” he says. He uses insurers including Berkshire and Kinsale for property and workers’ compensation coverage.

Kazan says obtaining directors and officers (D&O) coverage, which provides liability cover for senior staff and executives, and auto insurance for his distribution operations was particularly challenging.

Erich Bublitz, who oversees cannabis underwriting at Admiral Insurance, a subsidiary of W.R. Berkley, says his company avoids writing D&O coverage for cannabis groups because of their complex and sometimes opaque ownership structures, as well as the tangle of state and federal regulations.

“We don’t think there are enough controls in place for us to feel comfortable [writing D&O policies],” Bublitz explains. On auto insurance, he says, “workers in the industry tend to be users of the product — I’m not saying everyone who is driving is high … but auto is hard anyway and you add in that factor and it becomes too hard.”

However, Bublitz does not think the rates charged to insurance companies are significantly higher than in other industries and he believes there is increasing competition for business. “But there are additional exposures [in cannabis],” he argues, noting that people rarely break into buildings to steal soybeans.

Berkshire Hathaway and Aon did not respond to requests for comment.

Another risk that insurers mention is the prevalence of cash-based transactions when people buy cannabis products, resulting in significant sums having to be carried by delivery people or held at retail outlets.

Cynthia Cleveland, president of California cannabis company Vertical Brands, points out that this risk would decline with the passage of the SAFE (Secure and Fair Enforcement) Banking Act, a bill currently in Congress. If passed, the SAFE Act would make it explicit that federally regulated banks are permitted to work with cannabis companies in states where marijuana is legal.

“Our business welcomes regulation,” says Cleveland.

Source: OZY 

Chubb Announces Leadership Appointments for its North America Commercial Insurance Division

WHITEHOUSE STATION, N.J., Dec. 6, 2019 /PRNewswire/ — Chubb announced today leadership appointments for North America Commercial Insurance, the company’s $5.8 billion retail commercial property and casualty (P&C) insurance division that serves middle market and small businesses through 48 offices in the United States and Canada.

Ben Rockwell, currently Executive Vice President and Chief Underwriting Officer of North America Commercial Insurance, has been appointed Vice President, Chubb Group and will serve as Division President, Chubb Middle MarketJames Williamson, currently Vice President, Chubb Group and Division President, North America Small Commercial Insurance, will serve as Division President, Chubb Small Business, which includes the company’s product and service offerings for small and lower middle market companies.

Mr. Williamson and Mr. Rockwell will report to Paul Krump, Executive Vice President, Chubb Group and President, North America Commercial and Personal Insurance.  The appointments are effective immediately.  They succeed C. Scott Gunter, who is leaving the company.

“I want to thank Scott for his service to the company over the past three decades and wish him and his family well,” said Mr. Krump.

“It’s a great pleasure to appoint Jim to lead our exciting and fast-growing small commercial and lower middle market business.  This is a high-volume, high-tech segment where efficiency and ease of doing business is the name of the game, and Jim is a proven insurance executive and business-builder in this space.  He understands the importance of offering a 100% digital experience for our agents and is the right executive to lead our efforts as we continue to penetrate the $100 billion U.S. small commercial market.

“I am equally delighted to appoint Ben to lead our middle market business, which is a core Chubb franchise.  Ben is an experienced and seasoned underwriting executive.  His expertise and leadership skills will be instrumental as we execute our ambitious growth strategies and provide the industry’s leading product and service capabilities for middle market companies across North America in more than 25 industry practices, each supported by a team of underwriting, claims and risk engineering professionals.”

The company also announced that Alex Wells, Executive Vice President and Commercial Insurance Regional Manager, Northeast and Mid-Atlantic Regions, has been named Chief Underwriting Officer for North America Commercial Insurance, succeeding Mr. Rockwell.  Mr. Wells will report to Mr. Rockwell and Mr. Williamson.

Ben Rockwell began his career with Chubb in 1997 as a Casualty Claims Representative. In 1999, he joined the company’s casualty department as an underwriter. Throughout his career, he has held a variety of field and home office underwriting positions, such as Commercial Underwriting Manager, multi-line Executive Field Underwriter, Excess Casualty Manager, and Commercial Insurance Primary Casualty Leader for North America.  In 2018, he was appointed Chief Underwriting Officer of North America Commercial Insurance.  Mr. Rockwell has a Bachelor of Arts degree in Psychology from North Central College.

James Williamson began his career with ACE in 2013.  Prior to ACE’s acquisition of Chubb in January 2016, Mr. Williamson was Division President of ACE Private Risk Services.  He has also served as Senior Vice President, Chief Operations Officer of ACE’s Global Personal and Small Business insurance business, and as Chief Operating Officer for ACE’s International Accident & Health insurance business.  He was named Division President, North America Small Commercial in 2015.  Before joining ACE, Mr. Williamson served at The Hartford from 2005 to 2013 in a variety of senior underwriting, sales and strategic planning roles. Prior to The Hartford, he served at Bain & Co. as a consultant. Mr. Williamson received an MBA from The Wharton School at the University of Pennsylvania and a Bachelor of Science degree in Finance from Bryant College.

Alex Wells joined the company in 1992 as an inland marine underwriting trainee.  Throughout his career, which spanned both Chubb and ACE, Mr. Wells has held a variety of field and home office underwriting positions, including Senior Underwriter, Mid-Atlantic Zone Excess Casualty Leader; Chief Operating Officer, Westchester Excess Casualty; Specialty Casualty and Construction Leader, North America Commercial Insurance; and, since 2017, Commercial Insurance Regional Manager, Northeast and Mid-Atlantic regions.  Mr. Wells holds a bachelor’s degree in Finance from American University.

About Chubb

Chubb is the world’s largest publicly traded property and casualty insurance company. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London, Paris and other locations, and employs more than 30,000 people worldwide. Additional information can be found at: www.chubb.com.


Chubb to buy stake in China’s Huatai Insurance for $1.53 bln

Insurer Chubb Ltd said on Monday it could buy an additional 22.4% stake in Chinese insurer Huatai Insurance Group Co Ltd for 10.8 billion yuan ($1.53 billion).

Chubb, which already holds nearly 27% stake in Huatai, said it would first buy 15.1% and then an additional 7.1% stake based on the completion of the first contingent.

In March, Chubb raised its stake in Huatai to 26.2%, following approval from China Banking and Insurance Regulatory Commission.

“We are committed to supporting Huatai as a long-term strategic shareholder and we have great confidence in the long-term potential of the Chinese insurance market,” said Evan Greenberg, Chief Executive Officer of Chubb.

Chubb will buy Huatai shares from its shareholder’s Chinese chemicals maker Inner Mongolia Junzheng Energy and Chemical Group Co Ltd and one of its wholly-owned subsidiaries.

($1 = 7.0389 Chinese yuan renminbi)

(Reporting by Bharath Manjesh in Bengaluru; Editing by Shinjini Ganguli)

Edited for ILSTV

New Geneva Association & IFTRIP task force to address emerging cyber terror risks

The Geneva Association is launching a joint task force on cyber terrorism and cyber warfare with the International Forum of Terrorism Risk Reinsurance and Insurance Pools (IFTRIP). The special-purpose task force aims to conduct research on cyber terrorism risks across the re/insurance industry. Its initial findings will be published in mid-2020.

The launch of this new task force was announced at the IFTRIP 2019 International Conference in Brussels, Belgium. It will be led by Rachel Anne Carter, the Geneva Association’s Director of Cyber, supported by Julian Enoizi, CEO of Pool Re and Christopher Wallace, CEO of Australian Reinsurance Pool Corporation and president of IFTRIP.

Read the press release

IMS Demonstrates Insurance Telematics First: 42% Crash Reduction & 7% Combined Ratio Improvement

Waterloo, ON, Canada, Oct. 08, 2019 (GLOBE NEWSWIRE) — IMS, the insurance telematics technology arm of Trak Global Group (TGG) is now positioned to offer North American and European insurers unprecedented access to the learnings from driver data via TGG’s award-winning Carrot Insurance brand.

Carrot’s direct interaction with its installed customer base has driven innovative product development, including the latest telematics smartphone based “Better Driver” app, which  recently won the prestigious 2019 UK Insurance Times Technology and Innovation Award for Best Customer Mobile app.

“Carrot’s award-winning technology has modified driver behavior in a positive way, and we are eager to make our learnings accessible to insurers,” said Nino Tarantino, CEO- Americas, IMS.

Accessing this critical data will enable insurers to:

  • Improve policyholder engagement
  • Offer a reward platform that builds loyalty
  • Motivate safer driving behavior
  • Realize the positive impact on combined ratios

“We have developed and tested our insurance telematics propositions with our own Carrot customers so our insurer partners don’t have to,” Tarantino continued.  “No other telematics service provider has this kind of direct-to-policyholder experience and insight, but we do through Carrot, and we want to share what we have learned with the insurance companies we work with.”

Carrot, which launched in 2012, has since overseen a 42% reduction in the number of accidents among its customer base, thanks to its pioneering technology and an active risk management program, including rewards for good driving, which has turned the insurance experience on its head for policyholders.

Carrot’s policy has also built customer loyalty. The company has returned $5M to customers during the past seven years and the rewards program, in turn, offers a built-in incentive for consumers to check their status and driving feedback.  In doing so, frequently, consumers drive better and safer.

“Carrot’s telematics program has made a previously unprofitable market segment for us profitable again,” said Ed Rochfort, Managing Director of Carrot Insurance. “By analyzing telematics data we’ve been able to dramatically improve our risk pricing while reducing the cost of claims. A huge win by all accounts.”

“We’re making big improvements in reducing the cost of motor claims for our insurer clients, saving them time and money by providing indisputable proof of what actually happened in an incident. We believe Carrot’s claims data analytics has reduced CORs for our insurer partners by 7.7%,” Tarantino said. “In turn, our insurance customers are using these same insights from Carrot to create their own digital insurance strategies.”

For further detail on the Carrot difference, insurers can download IMS’ Carrot case study to access learnings and insights from this award-winning offering: https://www.intellimec.com/carrot-insurance-rewards-case-study. Alternatively, insurers can contact IMS for more information at: https://www.intellimec.com/carrot-insurance-insights.

About IMS

IMS, part of Trak Global Group, is a leading connected car and telematics solutions provider, delivering services and analytics to insurers, governments and enterprises. IMS is the developer of the cloud-based DriveSync® connected car platform which has received industry acclaim for its ability to offer customers a data source-agnostic, multi-device strategy for service provision.

About Trak Global Group

Trak Global Group (TGG) is one of the world’s largest telematics companies, gathering and interpreting data from connected devices to help organizations manage driver and vehicle risk. The group has long-standing partnerships with global insurers, leading motor manufacturers, corporate fleets and daily rental companies and is the UK’s largest insurance telematics business.

In late 2018, TGG acquired IMS, the 3rd largest insurance telematics business in North America. In addition to its partnerships with major insurers, it has more than 130 patents associated with connected car services and has pioneered the use of telematics technology for Road Usage Charging in the United States.

In September 2019, private equity house Three Hills Capital Partners took a significant minority stake in the business, providing in excess of $50 million in growth capital.

About Carrot Insurance

Carrot Insurance, also part of TGG, is a UK-based, award-winning telematics insurance broker specializing in novice drivers. In 2015, Carrot received the Prince Michael International Road Safety Award for its work in reducing young driver accident frequency, and in 2015, it launched Better Driver, an app-based product representing the UK’s first mass-market usage-based insurance product.

For more information on IMS:

Visit: https://www.intellimec.com

Why Cybersecurity Should Matter To Your Small Business

Huffpost Canada

In an increasingly demanding economy where time and efficiency are crucial, it’s incumbent on small business owners to ensure their proverbial ducks are in a row. Perhaps none of those ducks are more important than security, namely cybersecurity. Having e-commerce protection for both consumers and owners is essential to ensure your business doesn’t suffer from potential privacy breaches. In partnership with Intact Insurance, we’ve identified five reasons why cybersecurity should be top priority for your business.

1. Protect your business from phishing schemes

One of the biggest online foes for small businesses are phishing schemes. According to this 2019 US report, one in every 99 emails is a phishing scheme. This is when a scammer pretends to be a legitimate company or individual in the hopes of receiving your personal, banking or credit card information. Opening these emails can open up a Pandora’s box of problems. It’s important that business owners and employees recognize certain characteristics of these emails to avoid being a victim. If you don’t recognize the company or name of the sender, don’t open on the email. If you’re still unsure, try calling the company directly to verify the authenticity of the email.

“Invest in the ongoing training of your employees and managers to be able to recognize phishing scams,” recommends Yan Lacoursière, Senior Loss Prevention Consultant at Intact Insurance. Scammers use the human aspect to trick you (lack of knowledge and kindness, for example). “Remember, when in doubt, don’t click on anything and don’t give away any sensitive information,” he says.

2. Protect your business from denial of service attacks

Cybersecurity has also grown in stature due to the fact that phones and tablets can do everything traditional computers can. However, it also opens other avenues for risks from outside computers including a DDoS, or distributed denial of service attack. It’s a malicious attempt to crash one’s server by flooding the website with too much traffic. A strong preventive measure would be to use a cloud-based DDoS mitigation service – it’s what keeps a website running during an attack. Offloading server functionality to a cloud platform allows it to filter through malicious traffic before it reaches you.

3. Protect your business from online hackers

No matter the size of the company or its location, the looming threat of hackers stealing sensitive information is very real. According to the Insurance Bureau of Canada, nearly one in five small businesses (18%) have been affected by a cyber attack or data breach in the last two years. This not only applies to your company’s website but all social media and email accounts, too. Avoid the online threat by changing passwords regularly (quarterly is recommended) and disabling auto-fill forms. Store data in a virtual data room and hide admin pages from search engines, so hackers can’t find it easily. Above all else, keep your operating system and antivirus programs up to date to stay protected from malware.

4. Protect your business from wi-fi eavesdropping

By default, wi-fi is not secure. Hotspots don’t use encryption, providing no protection at all when on a public network. So, if you’re working remotely, the best way to secure data is to connect to a Virtual Private Network (VPN). By doing this, every activity on your or your employees’ computers is sent through an encrypted tunnel, making it extremely hard for anyone to eavesdrop and capture any passwords, emails and file transfers.

5. Have the right insurance when all else fails

The cost of repairing a breach and covering legal expenses could set you and your company back. Contact your broker to learn how privacy breach coveragecan manage the impact caused by theft, loss, or unauthorized access to your customers’ or employees’ personal information. Running a small business online can be both overwhelming and exciting. By staying informed and taking the right steps, you can ensure the safety of your business, employees and clients’ data. Not only that, you’ll be able to watch your business grow and fulfill your dreams.



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