Legal pot is just around the corner, so it’s high time Canadian insurers shore up their stance and strategy towards the drug.
The insurance industry has had a number of years to get used to the idea of legal marijuana for recreational use. During Justin Trudeau’s 2015 election campaign, the Liberal Party vowed to introduce the measure and are since making good on their intentions.
But after hours and hours of debate, the climate surrounding recreational cannabis and what it will actually mean for Canadian socioeconomics remains uncertain. Many industries, including insurance, are still tentative about getting too involved.
“Over the past 12 months, the climate rapidly evolved to reach a point where the majority of legal cannabis businesses and related businesses can now find broad coverage for all of their property, business income, and liability insurance needs,” said Brody Stonehouse, general manager, AC&D Insurance, and speaker at the upcoming Cannabis Cover Masterclass in Vancouver.
He added: “The primary difference is that, despite the availability of broad cover, the number of insurers offering cover for these businesses is very limited which results in limited choice and, with this, higher costs.”
Insurer perception is a huge road block in the development of the cannabis insurance market in Canada, according to Stonehouse. This resistance comes despite significant public support for legalization of the drug. A survey conducted by the Angus Reid Institute (ARI) earlier in April found that 63% of respondents were strongly or moderately in favour of the Liberals’ plan – with the strongest support coming from the 18-to-34 age group.
“I have approached almost every domestic insurer in Canada over the past 10 years and, until very recently, I would typically get a chuckle at the mere mention of developing insurance programs for the cannabis industry,” Stonehouse told Insurance Business. “Even though Lloyd’s markets have been one of the largest players in the medical cannabis business to date, and despite an increasing number of studies suggesting otherwise, there is often still a perception out of London that cannabis does not truly have any medical benefits and that persons that use cannabis are of a lower class.”
Positive change requires insurers to put aside preconceptions and look at the cannabis insurance market for “the excellent business opportunity it represents,” Stonehouse added. Learning from the “mature and seasoned market” in the US is one place to get started. This is a channel that will be discussed at the Cannabis Cover Masterclass in June.
“Eventually insuring Cannabis businesses will be as commonplace as insuring any other business,” he added. “The biggest opportunity is for those brokers that get in the market early, learn the intricacies of the industry, and build a strong relationship with the cannabis industry. Insuring cannabis businesses is the same as insuring businesses in any industry. Those that specialize and have a true understanding of the needs of the client will be the most successful.”
