AAIS Gains Approval of CannaBOP—the First Cannabis Businessowners Insurance Policy 

CannaBOP provides a package policy with both property and liability coverage for qualifying California cannabis businesses.

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AAIS (Lisle, Ill.) has gained approval from the California Department of Insurance for CannaBOP, which the California Insurance Commissioner describes as the first-of-its-kind Businessowners Policy designed for cannabis dispensaries, storage facilities, processors, manufacturers, distributors, and other cannabis-related businesses operating in California.

Dave Jones, California Insurance Commissioner.

Filed with the California DOI on 4/20, the AAIS California CannaBOP program received relatively quick regulatory approval, AAIS reports. CannaBOP provides a package policy with both property and liability coverage for qualifying California cannabis dispensaries, storage facilities, distributors, processors, manufacturers, and other businesses participating in or supporting the California cannabis industry.

With the U.S. cannabis industry expecting to generate more than $20 billion in medical and recreational sales, and over 250,000 jobs by 2020, insurance carriers are anxious to respond to the unique risks inherent in cannabis businesses, AAIS notes.

“Cannabis businesses need insurance coverage to help them recover when something goes wrong just as any other legalized business does,” comments Dave Jones Insurance Commissioner for the State of California. “This first-of-its-kind Cannabis Business Owners Policy or CannaBOP program will make it easier for more insurers to enter the market and fill coverage gaps for cannabis businesses. I encourage insurers to take advantage of this new standardized CannaBOP program to file more cannabis insurance products with the department to meet the needs of this emerging market.”

The new CannaBOP Program will enable AAIS members to be ready to respond with an admitted policy in a fast-emerging market, according to John Rich, Product Manager, Commercial Lines, AAIS. “New companies in a new industry represent a tremendous growth opportunity for insurers.”

Exclusion Endorsement

AAIS reports that it also has filed a broad interline Cannabis Items and Activities Exclusion with the state of California. The mandatory exclusion endorsement applies to all commercial lines policies in California, other than CannaBOP, and will be filed on a nationwide basis. The endorsement was developed to ensure that the increased risks inherent in cannabis-related activities are excluded. Rather, these unique exposures are more appropriately covered in the AAIS CannaBOP program. Filing the Cannabis Items and Activities Exclusion was undertaken to facilitate expansion of the CannaBOP program beyond California.

The CannaBOP program comes fully supported with rules and loss costs, according to AAIS. During development, AAIS partnered with actuarial consulting group, Merlinos & Associates, Inc., to help analyze market exposures and develop rating guidelines specific to the cannabis industry.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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