Expansive specialty MGA and wholesale broker Cannasure has significantly increased the capacity available on its core program offering for property and product liability following its 1 May reinsurance renewal, The Insurer can reveal.

Patrick McManamon – Cannasure

The Cleveland, Ohio-based firm specializes in writing coverage for the medical and recreational cannabis industry.

Patrick McManamon, founder and CEO of Cannasure, told this publication that the MGA is now able to put up $5mn per occurrence and $5mn in the aggregate for product liability exposure on the program it underwrites on the A- AM Best rated paper of Topa Insurance Group.

That represents an increase from the $1mn per occurrence and $2mn aggregate it offered this time last year, and the $2mn/$4mn most recently listed for product liability on the cannabis and hemp package program advertised on its website.

Product liability limits can be offered as $1mn/$2mn, $2mn/$4mn and $5mn/$5mn.

Meanwhile, the MGA can also put out limits of around $32.5mn per location for property risks, with the capability to add excess property capacity and bulk up to write buildings with values in excess of $50mn.

That compares to available limits of around $16mn 12 months ago.

On general liability, Cannasure continues to offer $1mn per occurrence on a primary basis, but has doubled the excess liability limit it can put out from $2mn to $4mn.

After securing the support of reinsurers at the recent renewal in a more challenging reinsurance marketplace, the MGA is continuing to look to further increase its line size, particularly for property risks.

At the renewal, Cannasure faced a tighter market for cannabis capacity that was exacerbated by the recent move by the Bermuda Monetary Authority to prevent Bermudian (re)insurers from writing US cannabis exposures.

That has had the impact of further reducing an already limited pool of reinsurers prepared to write the business, although it is understood that some Bermudians have been able to transfer their portfolios to onshore operations in Europe and the US.

Cannasure has used California-based Topa as the carrier for its core program offering since 2017.

Topa, which remains independent after the agreed deal to be bought by Altamont fell through last month, retains a portion of risk on the program and cedes the rest to a panel of reinsurers.

Cannasure ups limits

As well as its program relationship with Topa, Cannasure offers monoline coverages across several lines of insurance with E&S carriers including James River, Kinsale and WR Berkley’s Admiral platform.

Cannasure is also understood to be looking to add additional programs and product lines to support its cannabis industry customer base, including workers comp, cyber and transportation.

The MGA focuses on so-called “plant-touching businesses”, such as dispensaries, infused product manufacturers and cannabis cultivators.

As previously reported, the relatively limited number of carriers operating in the legal marijuana space means larger limits have not been widely available beyond $1mn per occurrence and $2mn in the aggregate for core coverages.

According to an AM Best report last year, those limits may be inadequate for marijuana business owners, who require higher aggregate limits.

Low limits have been a function of risk averse insurers looking to manage exposures in an emerging market, and a paucity of reinsurance capacity available to back their books.

The opportunity for the sector in growing premium is significant, however, with the market for legal marijuana sales projected to increase from $8bn in the US in 2017 to $22bn by 2022.