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Back in June 2018, AAIS filed its first CannaBOP policy to provide admitted markets a BOP that would cover the unique risks associated with cannabis businesses. While the admitted market has yet to fully embrace the cannabis businesses, this policy is paving the way for carriers to get involved with this truly emerging risk.

One speaker that the recent Insurance Journal Insuring Cannabis Summit noted that the cannabis segment is a true emerging risk unlike anything else that we’ve seen in many years in insurance. This is partially because of the tension that exists between the way that cannabis and cannabis products are treated by the federal government and the states.

One feature of the CannaBOP policy is how it defines its “basic territory”.

“Basic territory” means the United States of America, its territories and possessions, Canada, and Puerto Rico.

With respect to losses to “cannabis” or “cannabis accessories”, and losses arising out of or in any way related to “cannabis activities”, the “basic territory”:

  1. is limited to the state of California; and
  2. does not include land or property owned by the United States government.

The policy is limiting coverage related to the exposures of the cannabis business to the state of California, except for any land or property owned by the United States government. When you consider that almost half of the state is federal land, you understand that this is a significant limitation.

This is among the definitions that allow the policy to take a careful line between allowing coverage for a product that is legal in the state of California, while not allowing for illegal activity to occur (elsewhere, or within the state of California).

The Academy of Insurance is presenting our session Cannabis Risk Coverage Issues on November 7. You can sign up here.

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On October 17th, the Insurance Journal hosted a virtual, 6 hour, live summit on insuring the cannabis industry. With 2,300 pre-registrants, an additional 200 joined in as the day progressed. These viewers represented over 1,230 companies, 41 countries and 50 states. If you missed it, you can still gain access here, but if you need a bit of convincing, I’ve got you covered.

Here are the 5 top reasons you should you watch IJ’s Insuring Cannabis Summit:

You live in one of 33 states with legalized medical cannabis
You live in one of 11 states with adult use laws
You have interest in insuring participants in the industry
You insure business owners concerned about the impact cannabis may have on the workplace
You want to be informed of the risks and regulations of this industry before it reaches your state

If any of the above applies to you, take advantage of the on demand offer for just $129. Added bonus to the convenience of watching this on demand? Their presentation slides are available for download, which offers you the opportunity to not only learn the material, but also share it with your team, prospects, and community.

How to navigate 13 presentations (that’s over 300 minutes and 190 slides)

Beyond the Buzz…

Introducing Dr. Brenda Wells, Robert F. Bird Distinguished Professor of Risk and Insurance, East Carolina University. She sets the stage for the day, providing us with a common language regardless of where you sit in the insurance or cannabis industry. She offers both a historical perspective and the current state of the industry – uses, ruling, regulations and more. Brenda is a rock star, so don’t skip this intro!

What Risk Takers Should Know About the Marijuana/Hemp Industry

Next up, Joe Pangaro, Associate, Duane Morris, LLP, drills down into the implications of federal and state laws and the “black letter” risks that you may face transacting business in the cannabis industry – vs. the actual risks of enforcement of the laws. Joe leaves you with an important foundation, whether you have concerns, doubts… or none at all (because there are risks!). Side note: Joe had a baby girl just days later and we are very grateful for his involvement so near to such a momentous occasion!

All Toked Up: Challenges Insuring the New Cannabis Industry

This is a great panel of experienced cannabis insurance players – from the agency, underwriting and actuarial – gain the perspective on early adoption, product development and pricing, interaction with carriers and reinsurers and insights for the future of the market. Panelists: John Donahue, Beth Medvedev, Kyle Hales & Blaine Sherwin.

The Actuarial Experience with Cannabis

Greg Faneo, Senior Consulting Actuary, Merlinos & Associates, brings humor to his actuarial insights as he demystifies the actuarial process. As he say, “Your rate is okay as long as your actuary says so…” and given that this is an emerging risk with limited data available, he explains where the rates come from.

Who Needs Cannabis Insurance?

Hang on to your hat as Max Meade, Cannabis Insurance Advisor, Brown & Brown Insurance, provides you a high speed overview of who needs what coverage in the cannabis industry. He breaks out your “plant touching” and “non-plant touching” entities and their unique needs.

Cannabis Insurance Coverage Facts & Myths

Phillip Skaggs, Assistant Counsel, American Association of Insurance Services (AAIS) covers the facts and myths of cannabis insurance coverage. If you are entering this market, be sure to catch this presentation as the more confident you are about the facts, the better you are able to dismiss the myths.

Cannapreneur Panel

The feedback from this panel is enough to suggest you should watch these four pioneers. “I loved that panel.” “You guys were honest and charming. Great info” “Great panel. Very informative. Thank you all!” “Wow…that was chock full!” The advise on niching, marketing, and valuing your underwriter are essentials to entering this market. Panelists: Chris Boden, Matt Porter, Jeffrey Samuels & Jerrad Coots

Cannabis Underwriting 101

Our Cannapreneurs end their discussion with a focus on the importance of their relationship to their underwriters and along comes Charles Pyfrom, Senior Vice President of Commercial Programs, CannGen Insurance Services, to talk about the underwriting process and risk assessment. We didn’t even plan that – but if you’re planning to serve this industry, this presentation will cover the risks associated with property, crops, product liability, auto/cargo and more.

Cannabis Product Liability

Our own Patrick Wraight, Director, Insurance Journal’s Academy of Insurance, focuses on product liability, an extremely important topic of late given new discoveries around vaping, for example. Patrick shares his concerns around lack of standardization and claims made by distributors of CBD based products.

Broker’s Role in Educating Cannabis Industry

Kieran O’Rourke, VP Director of Underwriting, Cannasure, is our final presenter on the topic of insuring the cannabis industry. He provides a perspective on the broker’s role in educating the insured, providing guidance in areas of exposure and coverage and general terminology. After which, we turn to workers’ compensation!

From this point on in the agenda, the presentations focus on legalized cannabis in the workplace. This is important information for anyone with business clients in states allowing adult or medical use of cannabis.

Impact of Legalization of Marijuana on Workers’ Compensation

Laura Kersey, Executive Director—Regulatory & Legislative Analysis, NCCI, provides a comprehensive overview of state and federal regulations requiring reimbursement of legalize medical marijuana under workers’ compensation. Laura also addresses issues such as safety in the workplace and what happens if a worker is under the influence of an approved medical marijuana treatment when injured on the job or causes injury to another worker. This presentation sets the stage for the remainder of the day.

Legalization and Employer Liability and Employee Rights

As a follow on to Laura, Michael J. Progar Partner, Doherty & Progar LLC, focuses in on employer drug testing considerations, best practices and procedures. He includes a state level review of employer liability to employees.

Medical Cannabis Products and Reimbursement Policies

Lastly, the outgoing Adam Goer, Vice President Corporate Affairs, Columbia Care, brings the Summit to an end, discussing the details of medical reimbursement of medical cannabis. He shares the best in class program established by New Mexico, urges companies and individuals to look at medical cannabis as an alternative to opioids and offers insights into the future of medical cannabis and reimbursement at the state level.

If you’ve made it this far, I’d like to thank you for your time with this overview. I had the pleasure of working with these fine presenters during the weeks leading up to this event. They are passionate about their subject matter and want you to be successful in your business efforts. Interested? Gain your access to the Insuring Cannabis Summit 2019 for just $129 – 300 minutes and 190 slides.

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It’s November and while I have many reasons to be full of joy this time of year, there are still two events that reduce my joy. In fact, one of them makes me downright upset.

The first cannot be helped. It’s a part of the cycle of life. The end of October marks the end of the baseball season with all of its highs and low. Even though the team of my youth didn’t accomplish their task for the season, they placed respectfully and now I am forced to like the Astros almost less than I like the Red Sox. The end of the baseball season officially marks the beginning of the long dark night of winter.

The second event also cannot be helped, but that’s just because it is a part of the system that we have made for ourselves. Maybe it would be better to say that our forebears made it for us and pass it down to us. I’m speaking of the annual rite of passage we call “Open Enrollment.” It’s the time of year when we wring our hands over rate increases and slog through benefit summaries and cost estimates. It’s when I am forced again to handle the societal football of health care and wonder if we’ll ever get clear of this system.

Healthcare is the one service that people use where we don’t shop for providers. We go to our family doctor, or the nearest healthcare facility (or the best one we can find) and we don’t ask what this will cost. We simply demand service; the price be hanged. Then we complain when the bill comes, no matter how much our health coverage company paid or how much the provider wrote off. We have this idea that we have a right to Ruth’s Chris health care at a dollar menu price.

The current health care system in the United States is broken. None of the proposals that politicians are putting forth are any better.

I do not want healthcare the way it is.

What we have now is a mix of pre-paid healthcare and cost sharing. You pay the premiums for your health coverage every paycheck. For that, you get some benefits for free. All of your preventative appointments and tests are covered. We used to call them our annual physicals. Now they’re called well-person exams. Whatever.

For the rest of your medical care throughout the year, your doctors have signed agreements with the different health coverage companies. Those companies agree to pay your doctor an agreed upon fee, no matter what she thinks she should get for the service. The rest is written off and you pay a share, whether that’s your deductible, a copay, or a coinsurance amount.

There is a segment of society that cannot afford their coverage. I know young families that can afford their rent or health coverage, but not both. There are many in our society that simply cannot afford to pay for healthcare. I’ve been there. I can remember a hospital stay that I paid for over more than a year. For those who cannot afford healthcare, our government has set up a system where we the people subsidize part of the costs of their health care.

I do not want any form of socialized healthcare.

While we do have a socialized healthcare system already, there are still choices. I can go to any doctor. I can buy any health coverage that’s available. The only limit I have is what I can afford. In a socialized system, the direct and immediate costs of healthcare go away. So do the consequences of the medical false alarm.

When the customer has no financial consequences, every sniffle, ache, or cough turns into a visit to the doctor, especially when children are concerned. I saw this firsthand when I was in the Army. We had a medical clinic when my family and I were stationed at Fort Drum, NY. The clinic was a primary care center for the entire family and because it was run by the Army, it didn’t cost us anything to go there.

Imagine that you’re a young mother or father and your spouse is deployed overseas, and one of your three children is sick. You don’t know anyone because you’re living 500 miles from where you grew up. In those days, you couldn’t just call mom on your cell phone. You had to pay for a long-distance call. The solution was to go to the free clinic that you could drive to without leaving the post. That meant that the clinic was always full.

If you had an appointment, you could almost guarantee that you would be seen about an hour after your appointment time. If you were a walk in, you could just plan to spend the bulk of the day there. If the little one got sick after hours, you could always walk into the emergency room and then everyone gets to spend the night there. That’s the result of socialized medicine.

I want the market to truly drive healthcare.

Imagine this with me. When you choose your doctor, you get to compare her rates for services with the rates of other doctors in the area. Doctors are rated on criteria, such as price, manner, accuracy, and speed of service. You know what it will cost up front. In fact, one of the doctors in your neighborhood offers a membership where you get so many visits and tests in a year.

People get sick and people have accidents. That’s what you buy medical insurance for. It’s one of those things where you pay a premium for some time and if a covered event happens, it pays for it. If there’s a cancer diagnosis, there’s coverage. If the kidneys shut down, there’s coverage.

I know what you’re thinking. What about those that cannot afford their healthcare? That’s a good question. Since everyone else is paying market rates for their doctors’ visits, let individual doctors (either voluntarily or not) set up sliding scales based on financial need. They could even be required to take a certain percentage of patients that cannot pay full price.

When it comes to major medical needs, they may not be able to afford a standard medical insurance policy. For those cases, we could establish a residual market for those who need insurance but cannot obtain it due to financial hardship.

There’s another topic in this area that demands attention. What about people with chronic issues? That’s a little harder to tackle. People with chronic issues have years of expenses ahead when those issues come up. Sometimes when an issue comes up suddenly, or emergently, it can become a chronic issue. A chronic issue means repeat doctor visits with specialists, prescriptions for new medications, tests repeated cyclically, and complications. Those all mean mounting expenses.

The truth is that I haven’t thought that topic through all the way. These expenses could start under cover for the major medical expenses and transition to a subscription model where visits, prescriptions, and tests through the specialists are all covered.

I’m sure that someone will tell me all of the problems with this plan. I know that there are things that I haven’t thought of. I also know that you used to be able to pay your doctor and I’ve seen some places where doctors have operated under a membership model. I’ve also heard of the old major medical insurance plans. Sometimes we don’t need a new idea. We just need to go back to an old idea that worked.

PS – Don’t forget to review your health coverage during open enrollment.

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When asked how to determine the needs of a high net worth client, we describe their coverage requirements as complex. The question is, how does an agent identify those complexities and how can your carrier assist in that process?

In our recent interview with Melissa Apostle, Personal Lines Risk Management Zone Manager, with The Cincinnati Insurance Companies, she shares the importance of her role in identifying some of the complexities that reveal themselves during her home inspections. Melissa has been in the inspection and appraisal side of the business for 30 years.

How do you identify the needs of a high net worth client, and what might you find during an inspection?

A high net worth client has a need for superior coverages to protect their assets and lifestyle and is not price driven. Often, however, the client is not aware of their own risk profile or the coverages available.

I’ve been in homes where they have extensive art collections, a valuable baby grand piano or an antique harpsichord and I’ll say, “We can offer specialized coverage on that,” and sometimes they aren’t aware of the options. The insured is also likely not aware that we can cover purchases of collectibles in transit and artwork on loan or in process of being commissioned.

In addition, the homeowner is often unaware of the extent of contents coverage. Some people are under the impression that it’s just their furniture. I explain that it includes everything they’d take if they moved. I’ll say, “Take your house, turn it upside down, and shake it out. Everything that falls out is coming with you. Your spoons, your towels, your shoes, consider all of your possessions when choosing your contents limits.”

I’ll also explain that losses covered under contents are subject to a deductible, while insuring art under a fine art policy provides the added benefit of eliminating the deductible in the event of a loss.

Can you share more about the home inspection and what you are looking for when entering a home of a high net worth client?

When I arrive at a house, I am looking at the construction, finishes and features, which all contribute to the replacement cost of the home – the cost to repair or rebuild it. Additionally, I am looking for evidence of loss mitigation such as alarm systems or water sensors, any possible liability exposure and any special items or collections, such as art or wine, that the client would better protect with additional coverages.

At times I am entering a home that is under-insured due to the situation under which it was purchased and insured at closing. People who buy homes out of foreclosure or through an estate, a short-sale, or in certain states where the economy is suffering or taxes impact affordability, the discounted sale price does not represent the replacement cost of the home. As a result of these buying conditions, the price of labor and materials to repair a partial loss or to full rebuild the home are going to exceed the purchase price.

My inspection is going to disregard purchase price and focus on how we will replace the home with like, kind and quality. Prior to entering a home, I’ll look at the current coverage and that gives me a snapshot of what we’re insuring. But then, I enter a home and I often find quite the unexpected… marble floors, hand-painted murals with gold leaf and black onyx in the bathrooms and the value can go up several million dollars.

A home built in the 1700’s will require special craftsmanship; another home may have been designed by a famous architect, but if the homeowner bought the house for $1 million and it costs $3.5 million to replace, we’re going to insure it for $3.5 million. That’s a concept that’s very difficult to explain, but I will take my time with an insured at their home to explain that for two reasons. First, I want the insured to fully understand the coverage. And second, it helps the agent to know that I’ve explained the increase to their client, and I offer to do any follow up as well. We never want the insured to feel we are “over-insuring” them. We’re interested in replacement cost because the purpose of this policy is to indemnify the insured, to make them whole.

How would you describe your role in the process, with the agent and the underwriter?

I – along with my colleagues and my teammates – am the eyes and the ears of the underwriter and the agent. It’s our job to go beyond what appears on paper. It is also our job to identify potential risks and make recommendations to reduce the likelihood of loss.

We look at contents as well the condition of the home. There was a policy that had two Ming Vases on it, and I wanted to see where they were placed – was it an area of high traffic, are there pets or young children in the home, what is the risk that they could get knocked over? At another home, there were very small Dutch master paintings from the 1600’s. With artwork, I’m checking the safety of the location and the quality of the curation – are they in an area that can be reached from a window, or hung dangerously over a fireplace? If the homeowner has not brought in a professional appraiser for their collectibles, I’m going to arrange that for them, too.

We are also going to look for appropriate security and alarms, adequate fire hydrant accessibility, determine response time from fire fighters, and make suggestions where we see inadequacies.

What is the number one benefit you bring to the agent?

We create a personal connection with the insured. Sometimes we are the only one that meets with them, and it makes such a huge difference. I explain more about the process and Cincinnati Insurance and the role of their agent. While I’m in their home, I observe their lifestyle and that is also when I uncover additional needs – such as coverage for domestic employees or learn about unique collectibles, whether jewelry, high fashion, antique cars or golf carts. It’s the opportunity to be on-sight that is going to give rise to the unexpected risk that we can mitigate.

****

When you cover a high net worth individual, the coverage can be more complex because their possessions may be exposed to additional risks and are often of great value. They may also require additional coverages such as kidnap, ransom or personal cyber protection against cyber attack, extortion or fraud. But as Melissa describes, the high net worth individual’s needs are most often revealed through a home visit and the personal connection that The Cincinnati Insurance Companies’ services provide.

For more information, visit www.cinfin.com/capstone.

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The knowledge each of your business clients have of insurance costs and premium calculations falls along a spectrum from unsophisticated to savvy. For most, it’s a budgeted line item required for risk mitigation, but the inability to predict rate changes makes it difficult to project. If that line item is uncertain year over year, it adds a layer of financial stress, when insurance should be offering peace of mind.

Hence, for some commercial lines of business, Cincinnati Insurance offers a unique 3-year policy. This gives business clients stabilization and budgetary control over the insurance line item. While the premium may increase or decrease with changes to their existing exposures such as increasing sales or revised building valuations, the rate itself won’t change for their property, general liability, crime and inland marine insurance.

The stability of this policy allows independent agents representing Cincinnati to spend more time understanding their clients’ businesses and less time processing renewals. You can feel secure in the relationship, and strengthen it, as you meet annually to discuss changes in exposure and how those might impact the premium. This 3-year rate commitment is available for many business clients, regardless of size.

Imagine the benefit of not requiring an annual, lengthy renewal process. There is no annual underwriting, binding or application processing – just the changes reported based upon discussions with clients about updates to their business and exposures. Clients enjoy the stability of these rates while Cincinnati’s independent agents protect their book from competitive annual quotes luring business clients elsewhere.

Clients may ask, what could change my rate? During your annual review, you’ll be looking for changes to property values, payroll or sales estimates. Is the scope of the business changing or expanding into new services requiring new classifications? Similarly, a location change could require a new rate. You can explain to your clients that the rate will remain constant for existing exposures during the 3-year term, while any new exposures created by changes in the business could trigger a new rate.

The Cincinnati Insurance Company developed this unique policy because we understand the cost and time involved in client acquisition and the increasing frequency with which insurance is shopped. The ability to bring greater convenience and stability to commercial clients is a win for everyone.

What can you share about Cincinnati Insurance with your clients?

  • Founded nearly 70 years ago by four independent insurance agents who understood the benefit independent agents brought to the client relationship
  • More than 1,400 field representatives supporting agents and their clients
  • Offers a full-service product portfolio to cover business, home, auto and life
  • Scored a 94%, high satisfaction rating on their claims processing via a recent survey of over 43,000 policyholders
  • One of the 25 largest property casualty groups in the country based on net written premiums
  • Maintains industry-leading financial strength

To learn more about how The Cincinnati Insurance Company can support your business clients, visit www.cinfin.com.

Coverages described here are in the most general terms and are subject to actual policy conditions and exclusions. For actual coverage wording, conditions and exclusions, refer to the policy or contact your independent agent. Ratings are under continuous review and subject to changes and/or affirmation. See each rating agency’s website for the latest financial strength ratings. Property and casualty coverages may be provided by The Cincinnati Insurance Company or one of its wholly owned subsidiaries, The Cincinnati Indemnity Company, The Cincinnati Casualty Company or The Cincinnati Specialty Underwriters Insurance Company. Each insurer has sole financial responsibility for its own products. Not all subsidiaries operate in all states. Location: 6200 S. Gilmore Road, Fairfield, OH 45014-5141.

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I wonder how many of us grew up wanting to get into the insurance business.

I know that I didn’t. My path took me around the world before I found myself in need of a job. That’s what brought me into the insurance realm. Except for a few hiccups along the way, I haven’t looked back. I’ve enjoyed the arc of my career over these 15 years.

The question keeps coming up about how we are going to keep showing people the benefits of a career in insurance. I could herald the millennial cry of work-life balance, keeping team members from getting bored, and rapid advancement. That’s not the point today.

In truth, I’d like to suggest that we shift focus from all of these external trappings. The workforce today is simply doing what the generations before them did. For the Millennial, they want to know that their company is doing good, they want to have time to go do good, they want flexible schedules, etc.

My fellow Gen X’ers (yes, we’re still here) came into the workforce looking for something that would provide us mobility, whether that was location mobility or position mobility. One of our goals has been to move on to different responsibilities. There’s more to it than that, but it sets the stage.

The Boomer generation looked for a stable company where they could hang their hat for 40+ years, working their way up the ladder. They prized the joint loyalty that they had with their companies. They also liked company cars and expense accounts, but that’s another story. We’ve come a long way from the early days of the industrial revolution when workers were simply happy to have a job where the possibility of dying at work was lower than their neighbor’s job was.

You see, every generation wants something from the jobs and careers that they choose. I’d like to posit that the generations to come will have certain expectations from their jobs that we can’t even think about yet and that’s not where we should focus.

I want to focus on the stories that get told.

In many minds the story of the insurance agent is the story of Ned Ryerson. Needle-Nose Ned, Ned the Head, amiright or amiright?

What if the story of the insurance agent was about a small business owner who, in the midst of the chaos of a major hurricane ripping his town apart, works his team sunup to sundown to make sure that their customer-neighbors can get their claims filed?

What if the story of the insurance company isn’t about how many claims are denied, or how often payments are less than expected, but it’s about companies that proactively reach out to their customers, prepared to pay what’s owed so that the customer can start getting back to normal?

What if the story isn’t about how boring insurance can be, but it’s about how exciting it can be?

The stories that we tell color the experiences of our lives. We would like to tell a different story.

We want to tell the story about how insurance helps people in their most difficult days. We want to tell the story about how insurance backs some of the greatest innovations yet to come. We want to tell the upside of the insurance story.

You might ask if we plan to tell the negative side of the story as well. No. We don’t. That story is told all too well. You can find that part of the story with a simple internet search, or a drive down most interstates.

That’s why we have a new project in the works. We have released the first in a series of books designed to help children discover the realm of insurance: Popsicle Insurance. We wanted to create a short story that would connect moments in the lives of children (like when you really want a popsicle, but you can’t get any help) to the realm of insurance.

In our first book, we meet Drexler and his family. They’re a regular family. Mom is an underwater welder and Dad works from home as an insurance agent. Spoiler alert: Drexler asks dad the one question he had always wondered; what do you do?

It’s our hope that you will embrace this book in the same way that you’ve embraced our other books. Our goals in writing this book are simple.

  • We wanted to show young people that insurance is an important part of life.
  • We wanted to show them that insurance helps people.
  • We wanted to show them that insurance is an interesting career choice.

We are proud to present to you our first adventure into children’s books; Popsicle Insurance.

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