From our perspective, the timing is appropriate based on the limited number of insurance carrier, deficiencies in coverage language, and failure by the insurance to offer a comprehensive program.
California Insurance Commissioner appointed chair of national cannabis insurance committee
SACRAMENTO, Calif. — The National Association of Insurance Commissioners (NAIC) yesterday voted to establish a Cannabis Insurance Working Group to address the issue of insurance availability for the legalized cannabis industry. Recognizing California Insurance Commissioner Dave Jones’ leadership on the issue, the NAIC appointed Jones chair of the NAIC Cannabis Insurance Working Group.
At the NAIC’s Summer National Meeting, Commissioner Jones proposed that the NAIC establish this working group to enable state insurance regulators to better understand where there are insurance coverage gaps for the legalized cannabis industry and to share and develop best practices for state insurance regulators to follow to address coverage gaps and cannabis insurance regulatory issues. Jones previously successfully chaired the NAIC Sharing Economy Working Group which developed a template for insurance coverage for ride sharing and home sharing. Like these prior working groups, the Cannabis Insurance Working Group will enable regulators to better understand the legalized cannabis industry and its insurance needs and the role insurance regulators can play in helping to address insurance needs.
“Cannabis businesses face insurance availability and insurance coverage gaps – which means that those who shop, those who work in, those who sell goods or services to, or those who own, invest in or operate cannabis businesses may not have access to insurance to help them recover if there are accidents, injuries, property damage, or any of the things insurance typically covers,” said California Insurance Commissioner Dave Jones. “As state insurance regulators, one of our responsibilities is to understand new legal businesses and their insurance needs, and then work to encourage the availability of insurance to meet these new risks and coverage needs. I look forward to working with my fellow state insurance regulators to better understand the insurance needs of the legalized cannabis industry and the role we can play in helping to address those insurance needs and other insurance regulatory issues.”
The newly created NAIC Cannabis Insurance Working Group will consider the insurance regulatory issues surrounding the legalized cannabis business from seed to sale, including availability and scope of coverage, workers’ compensation issues, and consumer information and protection. The working group will also develop a white paper outlining the issues and make recommendations for the development of regulatory guidance as appropriate.
Insurance Commissioner Dave Jones launched in California an initiative last year to encourage admitted commercial insurance companies to write insurance to fill coverage gaps for the cannabis industry. As a result of Jones’ initiative, in California the first filing and approval of an admitted commercial insurer offering insurance for the cannabis industry was announced in November 2017, the first surety bond program for the industry was announced in February 2018, the first coverage for commercial landlords for the industry was announced in May 2018, the first standardized cannabis policy forms and program filed by the American Association of Insurance Services (AAIS) was approved in June 2018, and just last week three more insurance carriers were approved by Commissioner Dave Jones to offer surety bond coverage for the cannabis industry in California.
Jones has convened meetings between commercial insurance company executives and cannabis business owners to educate the insurance industry about the sophistication, professionalism and risk management of the cannabis industry. Jones has also organized tours for insurance executives at cannabis businesses.
In October of last year, Jones held a first-in-the-nation public hearing to identify insurance gaps faced by the cannabis industry. Cannabis businesses and insurance industry representatives testified about the limited availability of insurance for cannabis businesses. The hearing revealed that while there is insurance available from surplus lines insurers, insurance gaps in coverage remain, and, until the approval announced last November, no admitted insurance carriers were offering insurance products to cannabis businesses. Jones also announced that he has directed Department staff to devote the resources necessary to timely review the cannabis product and rate filings.
In May, Commissioner Jones hosted a webinar titled “Weeding through the Unique Insurance Needs of the Cannabis Industry” with the National Association of Insurance Commissioners (NAIC) Center for Insurance Policy and Research (CIPR). In April, Jones renewed his call for insurers to offer insurance products for California’s legalized cannabis industry in the wake of published reports that President Trump has overruled Attorney General Jeff Sessions’ policy on federal law enforcement against state legalized cannabis. Jones sent a formal letter to California insurers encouraging them to fill insurance gaps for California’s cannabis businesses.