AM BestTV: Legalized Cannabis Creates Insurance Concerns and Opportunities, Say AM Best Analysts

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FOR IMMEDIATE RELEASE

OLDWICK - APRIL 08, 2019 01:12 PM (EDT)
In this episode of ^AM BestTV, Josie Novak, associate analyst, and David Blades and Robert Raber, associate directors, all of AM Best, discuss how expanding legal use of cannabis is impacting personal and commercial lines of insurance coverage. Click on http://www.ambest.com/v.asp?v=cannabisreport419 to view the entire program.

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 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.”

To access a copy of this special report, titled, “Cannabis: New Opportunities for Insurers, But With Burgeoning Risks,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=283604 .

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^AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html . View ^AM BestTV episodes at http://www.ambest.tv .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.