The Cannabis industry in the United States of America has developed through collaborative efforts. Any cannabusiness is considered part of an emerging insurance market. For insurance carriers to offer better terms, prices, and limits; proper training, compliance, and regulations must be implemented and followed. This can be done through education.
Proper insurance needs to be purchased and maintained. Policy guidelines need to be followed collectively by the industry to see positive change. Carriers’ rates are determined by statistical analysis of past losses based on specific variables of the class of business. There is not enough actuarial data available to know the best rate calculations for cannabusinesses. The data that is available depicts overall lackluster performance from a claim perspective and a lack of due diligence by insureds. Education can combat these issues.
The next 8-10 years will allow for the development of solid actuarial data that will either work for, or against the cannabis industry insurance premiums and options. Rates will be based on performance of the risk categories. Whether a grower, extractor, manufacturer, distributor, transporter, packager; Budtender or Executive; the way toward better rates, lower claims, and overall good health of companies and employees, starts with education.
Three ways Education can positively impact insurance:
- Employee and executive education mitigate risk. Mitigation is a sustained action taken, such as employee training, to reduce or eliminate risk to people and property from hazards and their effects. Education is commonly used to increases preparedness, not only to avoid claims, but to increase employee readiness response when a claim occurs. Proper procedures, handbooks, and training have been proven to lower the chance of a claim occurring and lower the overall impact of a loss when a claim occurs. Carriers always review a company’s loss history. The data is rated for 5 years and highly impacts premium.
- Coursework will foster stronger corporate ties by retaining knowledgeable employees, creating a safer work environment, and increasing employee loyalty. Education supports aspects of ESG (Environmental-Social-Governance). Banks, Investors, and other financial and community organizations prefer to support companies that are respecting the ESG ideal and implementing changes, such as sexual harassment training, gender equality, fair hiring practices, and safety training.
- Potential to receive policy premium credits. Education and Member organizations are always considered in the insurance application process due to cannabis still being manually underwritten. Collectively using a respected training program will provide more data to insurance carriers and assist in the rating process.
There are many policies where education and compliance can affect policy terms, pricing, and coverages. Examples are Workers Compensation, Employment Practices Liability, General Liability, Professional Liability (E&O), Cyber/Data breach, Property, and Directors and Officers coverage. Education background is already applied in many insurance sectors such as construction, medical, law, and will continue to be important to this emerging insurance market.