It is difficult to place board members and executives for companies that run cannabis and hemp companies due to lack of capacity and available insurance companies, according to a speaker at the Business Insurance Cannabis & Hemp Conference, which was held practically.
Benjamin Sibthorpe, vice president of management responsibility at San Diego-based CannGen Insurance Services, said the cannabis industry's dichotomy is tightly regulated and federally illegal, creating a potential "minefield" for executives and officials trying to judge a company's operations.
Alan Devey, Chicago-based vice president and producer of Lockton Cos. LLC, said that due to the explosive growth of cannabis as a new industry, many potential first-time insured insurance buyers require additional time to educate themselves on complex issues including D&O.
Both agreed that the market conditions for cannabis D&O coverage are still challenging. Mr Sibthorpe referred to being part of a panel in April in which cannabis D&O was described as "a tough market in a tough market", which Devey said is still true.
Mr. Devey said that of the approximately 60 insurers that offer D&O coverage, only about 1
Mr. Sibthorpe joined CannGen earlier this year to help launch its pro division to offer handling responsibilities. He noted that CannGen offers a range of products such as property and warehouse coverage to cannabis operators and that D&O coverage is an addition to that.
"A D&O offer is something that the market has really called for," he said.
Mr. Sibthorpe said that insurance companies largely operate on data and that as the cannabis industry matures and generates its own data, more capacity will enter the market.