(Image source: viciousartstudios.)
When Patrick McManamon founded Cannasure (Cleveland) in 2010, the creation of the company was itself an act of innovation. However, to take full advantage of the growth opportunity of rapidly expanding industry, Cannasure would need to break away from the traditional processes and systems of the surplus lines business. The company decided to replace its legacy systems with a new end-to-end suite of systems with Hyland’s (Cleveland) OnBase and related technology at the front end—which members of the company discussed at Hyland’s CommunityLIVE event last week.
McManamon’s inspiration to found Cannasure came from a conversation with a friend who was opening a medical marijuana cooperative in Southern California but was have trouble getting business owners insurance at a reasonable cost. From his third-generation retail insurance agency, McManamon offered to search for coverage for his friend. As a result, he decided to form Cannasure, which divides its business between MGA program business and wholesale brokerage.
Today the company provides insurance for stakeholders in the cannabis industry, including dispensaries, cultivators, processers and manufacturers, ancillary businesses, landlords, testing laboratories, medical marijuana physicians, and marijuana events.
The cannabis industry’s insurance opportunity is the mirror of its challenges, according to Joe Foley, CFO, Cannasure. Because cannabis is illegal at the federal level but legal in certain states—sometimes only for medical purposes, sometimes both for medical and recreational use—the industry has unique challenges with regard to banking, paying taxes, interstate transport and other operational issues. “These challenges allow us to navigate the industry and develop solutions that others without that core industry focus can’t aren’t willing to,” Foley comments.
Rapidly Expanding Industry
Describing the business opportunity, Foley notes that in 2014, the size of the medical and recreational market was about $3 billion; this year it will be over $16 billion, and it is forecast to double over the next five years.
To be able to meet the challenges of this complex business—including to have the ability to scale capabilities rapidly with the growth of the industry, Cannasure saw the need to embark on a new IT strategy. The company’s existing systems mirrored the standards of the surplus lines insurance sector, which tend to be on the conservative side, according to Jenna Meyer, Systems Manager, Cannasure. “We’re constantly changing directions and adapting to continue our growth, and the traditional insurance solutions don’t respond fast enough,” she says. “We were finding it more and more challenging to serve all the different needs that we have—whether that be sharing monthly bordereaux reports with carriers and the detail that goes into that, or providing efficient ways for applications to be submitted and processed.”
The front-end application process was a particular source of inefficiency because of the peculiarities of the business lines. “There are different questions we need to ask that are not found on any ACORD form,” Meyer elaborates. Applications were typically received as PDFs, which required significant data entry work to transfer information to systems. “depending on your quote-to-bind ratio of a given type of business, the data entry sometimes just wasn’t worth it—if we didn’t bind it why are we spending time on it?” Meyer notes.
Solving this crucial problem led to discussions with Hyland, which McManamon was familiar with through family connections. Cannasure began working with Hyland in spring of 2019 to help design a new end-to-end processing environment, and by summer that year the company began implementation.
Cannasure decided to solve its new business inefficiencies through OnBase’s advanced capture OCR solution, which scrapes information from incoming PDFs of applications.
The ‘First Stone’ In the New Technology Environment
“We needed a technology-based solution and outsourcing wasn’t an option,” Meyer relates. “We checked out Hyland’s advanced capture solution and made that our first stone in building out this new whole new infrastructure.”
From the advanced capture solution, the data goes to OnBase’s Imaging/Document Management system, which hosts all applications and supporting documents. Relevant data is also routed to Salesforce, which serves as Cannasure’s main CRM system. “With that we can take integrate with third parties we can pull all kinds of information,” Myers says. “There are ton of open APIs to work with on a low-code/no code basis—it’s just really fantastic and the speed-to-market improvement is tremendous. The amount of time that we’re saving just on the front end is insane,”
Cannasure uses Salesforce’s Conga digital document transformation suite, which pulls data from Salesforce and imports it into templates for proposals, claims forms and other documents. The company uses accountingseed (Columbia, Md.) as a financial module which Meyer says is especially useful for the vagaries of surplus lines tax.
The new environment also has reporting and analytics capabilities that improve upon Cannasure’s legacy technology environment, according to Foley. “we have lots of I interesting and good information that’s in our current system, but every time we use it we have to build SQL queries that are in Excel and then do a bunch of manipulation to it,” he explains. “That’s one of the things we’re really excited about with the new system: being able to have more dynamic up to the minute visually appealing automatically updating reports and another types of information—KPI types of things.”
Late November Go-Live
Foley says the new environment will go live in late November and calls the work so far as just the first “heavy lift,” the first of several phases. “We have embarked on a multi-year process to reinvent how we do business through better processes, technology and widgets,” he says.
During the next six to 12 months, Cannasure will be completing conversion of its existing agency management and imaging/document management systems. The company will also start identifying and utilizing third-party data sets for underwriting validation, build capabilities for premium financing, introduce compliance automation capabilities, and launch agent onboarding and application portals.
“Given the particular drivers of this market, we need the capabilities that will enable us to operate efficiently the high-growth mod that we anticipate being in for the foreseeable future,” Foley remarks. “All of this is about being able to scale efficiently.”