NAIC Publishes Updated Cannabis Insurance White Paper
The National Association of Insurance Commissioners (NAIC) adopted the Regulatory Guide to Understanding the Market for Cannabis Insurance: 2023 Update white paper August 16 during its 2023 Summer National Meeting.
The white paper explores emerging insurance issues in the cannabis industry and the current state of cannabis regulation in the United States. The NAIC Cannabis Insurance (C) Working Group of the Property and Casualty Insurance (C) Committee produced the white paper as an update to the NAIC’s original cannabis white paper published in 2019.
The updated white paper discusses how the cannabis industry has become more sophisticated, with its rapid expansion driving new product development, infrastructure changes, and the need for businesses to provide ancillary services. It also outlines how the state of cannabis regulation, specifically at the state and local levels, has evolved significantly.
The white paper avoids advocacy and focuses on issues impacting affordability and availability of insurance for cannabis-related risks in states that have legalized its use.
Key findings of the white paper include:
- Capacity has improved since the 2019 white paper. However, most of the commercial insurance for cannabis-related businesses is still found in the non-admitted market.
- Smaller industry players are most impacted by the lack of admitted options since the nonadmitted market doesn’t offer the “off-the-shelf" insurance solutions typically available in the admitted market.
- Insurance gaps are most prevalent in the emerging areas of the cannabis industry, such as ancillary services, cannabis-infused products, and social consumption lounges.
- Among the potential structures being explored to facilitate cannabis-related business coverage are the use of state-based commercial insurance programs, risk retention groups (RRGs), captives, and joint underwriting associations (JUAs).
Read the Regulatory Guide to Understanding the Market for Cannabis Insurance: 2023 Update white paper in its entirety.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.