Cannabis companies are paying 5-10 times more in premium than a “regular” insured, according to Brayden York, insurance and risk manger at Aurora Cannabis.
Aurora Cannabis is a Canada-headquartered integrated cannabis company which describes itself as a “pioneer in medical cannabis”.
“The Cannabis industry has probably the highest rates amongst any classification of insurance,” York said in an exclusive interview on GCP #68. “I think globally most cannabis companies are paying, I’d say 5-10 times what a regular insured would pay.”
He added that even though the cannabis plant has been around for a long time, it still has “crazy” insurance prices, especially when compared to traditional pharmaceutical companies.
Utilising a captive, he explained, was ultimately an opportunity to save on insurance premiums and initiate a self-funding strategy.
He noted that the company had set up both a single parent captive domiciled in British Columbia, Canada, as well as a segregated cell in Bermuda.
“We’ve initiated both strategies with a captive and a segregated cell to supplement our insurance programs in different ways,” he said. “And that’s both for our P&C insurance, as well as our D&O liability insurance.”
York said the company decided to domicile the pure captive in British Columbia as it is one of the only places in Canada that had captive legislation.
Bermuda has proved a popular destination for corporations to utilise a cell to self-insure D&O, while its legislation allows businesses to write cannabis-related risk if it is federally legally where the business is operation. Cannabis has been legalised at the federal level in Canada.
York said that cyber and liability are lines he is considering insuring through the captive, particularly as liability cover is a particularly “touchy topic” for the cannabis industry as there are often of exclusions around health hazards.
He revealed that he had looked into the formation of a group captive, in order to help establish supplementary coverages, and is also exploring the idea of setting up a third structure to support policy areas where there is “no market coverage”.