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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.
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 Market. James 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.
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.
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
JERSEY CITY, N.J.–(Business Wire)–Arch Insurance (Arch) today announced that Jeff Ray has joined the Company as Senior Vice President for Accident & Health. Ray brings over 35 years of experience establishing and leading Accident & Health businesses and will report to Linda Fallon, Executive Vice President of Arch’s Travel & Accident business unit.
“We are excited to add Jeff to our team as we look to further grow our Accident & Health business,” said Fallon. “His industry expertise and proven track record in business development, distribution and management will help to broaden our position in the marketplace.”
Ray has a long history of successful leadership roles in the Affinity market. Prior to joining Arch, Ray served as Senior Partner, Affinity Markets leader at Mercer; Head of Affinity and Educational Markets at AIG; and Senior Vice President and Affinity Services Business Unit Leader at Transamerica. His career also includes executive roles at Selman & Company and as a Managing Director at Marsh.
“Arch Insurance has a demonstrated history of innovation and growth,” said Ray. “I’ve been impressed with the recent successes across Arch’s portfolio of businesses and am looking forward to working with the team to drive growth in A&H.”
About Arch Insurance North America
Arch Insurance North America, part of Arch Capital Group Ltd., includes Arch’s insurance operations in the United States and Canada. Business in the U.S. is written by Arch Insurance Company, Arch Specialty Insurance Company, Arch Excess & Surplus Insurance Company and Arch Indemnity Insurance Company. Business in Canada is written by Arch Insurance Canada Ltd.
About Arch Capital Group Ltd.
Arch Capital Group Ltd., a Bermuda-based company with approximately $12.89 billion in capital at Sept. 30, 2019, provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward-looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or their negative or variations or similar terminology. Forward-looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions;increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Jay Virdi has been named Chief Sales Officer for HUB’s cannabis insurance and risk services in the U.S. and Canada.
PRESS RELEASE – HUB International (HUB) recently named Jay Virdi Chief Sales Officer for its cannabis insurance and risk services in the U.S. and Canada. Virdi most recently developed and managed the cannabis practice group for a North American specialty risks MGA. He has become a reputable leader in the advocacy for risk management and innovative insurance solutions in cannabis for clients, brokers and insurance providers.
As Chief Sales Officer, Virdi will focus on further developing and perpetuating deep expertise and resources across the U.S. and Canada, to provide medical and recreational cannabis producers, distributors and retailers proper protection and specialized solutions to reduce risks in all aspects of their operations.
Virdi has more than 15 years of experience in the insurance industry providing support for sales activities and operations, including the execution of strategic initiatives. He has experience advising on commercial lines insurance solutions and underwriting complex risks and commercial programs. Additionally, Virdi was a global sales consultant where he advised insurance carriers using big data analytics. His insightful recommendations resulted in the creation of innovative new products, identifying areas of opportunity for revenue generation and establishing meaningful key stakeholder engagement.
Virdi is a Chartered Insurance Professional (CIP) from the Insurance Institute of Canada. He holds an Honors Bachelors of Arts (Hon. BA) degree in Economics and Business Management from the University of Toronto and a Digital Certification in Communications, Culture and Information Technology (CCIT) from Sheridan College.