Editor's Note: This part of a series of cannabis broker profiles, in which Insurance Journal explores why and how these people got into the business, the ups and downs of insuring cannabis, as well as some tips for those interested in a small professional development.
Erich Schutz is a broker, insurer and risk manager at NIF Group | Jencap, which caters to the needs of the hemp and marijuana industry across the country.
Schutz specializes in hard-to-place multi-state cannabis insurance programs and has over a decade of experience providing insurance industry solutions for deductible and excess insurance.
He thought it through carefully before taking the plunge into cannabis insurance a few years ago. But there is now little doubt about his enthusiasm for the industry.
Schutz, whose LinkedIn profile proudly & # 39; Cannabis Insurance Ninja & # 39; as part of its title, says insuring cannabis is "hands down the smartest career decision". was he ever took.
Schutz spoke to Insurance Journal about his experience as a cannabis broker.
Insurance diary: Why did you end up in the cannabis and insurance world?
Schutz: For starters, I am passionate about cannabis and I really like my job as an E&S broker. I saw a big gap in the market and knew I could bring my customer service-oriented approach, insurance experience, market knowledge and expertise to a highly underserved industry segment.
Coming from a small regional wholesale brokerage, I quickly realized that all of the (so-called) heavy hitters in the New England E&S brokerage had little idea what they were doing in terms of cannabis insurance, nor had the majority of them any interest in to learn a new, hard-to-place industrial class in a very soft market.
At the time, Massachusetts, where I live, had gone recreational with dispensaries to open at the end of the year, and it looked like the Agriculture Improvement Act (2018 Farm Bill) was likely to be passed, legalizing hemp at the federal level. My perception was that over 90% of cannabis insurance expertise was in a small handful of largely Western states. The table was set and no one around me seemed hungry or willing to take a seat, so I tied on my Red Lobster bib and started eating that cannabis insurance elephant one policy form at a time.
IJ: Has this been a good financial decision so far?
Schutz: The grass is always greener as they say, but yeah, this was hands down the smartest career decision I've made and I don't regret it. It wasn't something that I took lightly and discussed at length with my family and friends before going all in. At the end of the day, the numbers speak for themselves when it comes to finances, but that's not the point for me.
Our team is building a brand that prides itself on doing what's best for the cannabis customer, no matter who gets the commission check – although we all have to pay bills and bosses to answer. That said, it is my loyalty to the cannabis plant that gives me a unique perspective and value proposition in the space.
IJ: What's the hardest thing about the cannabis industry to deal with?
Schutz: As an industry, that's an easy question to answer: traditional commercial banking and credit facilities. I don't know of a flipping operation that doesn't constantly grapple with the dichotomy between federal bans and state legalization. I think someone should write a book and name it, “Cash? Where to get it and how to store it. A Cannabusiness Tale. "
On the insurance side, high TIV ownership is the hardest thing to deal with for most agents and brokers. I would say that for those who work in the space, it is an insurmountable challenge and generates a lot of unnecessary churn in the market, be it renewal or interim.
That's why our holistic approach at JenCap starts with understanding your client's growth strategy long before choosing an insurance provider (s). I can't imagine any greater embarrassment than running out of TIV / capacity halfway through a planned expansion, yet we're constantly saving interim deals as a result. Plan. Prepare. Appearance.
IJ: Which insurance product is the hardest to obtain for your cannabis industry customers? Why?
Schutz: High VTBI trait, no exception. Yes, employee benefits, D&O, and cyber only have a few markets, and if you don't have access to all of them, it's hard to be a one-stop cannabis broker, but those placements are actually about expectation management and access over grit and creativity. Those traits – plus a hard stomach – are needed to successfully pass the cannabis possession renewal season in 2021.
While COVID may have lowered some operational sales and growth prospects, we don't see renewals coming in looking for a lower VTBI than expiring. It is actually quite the opposite. Last year we thought a larger cannabis possession placement would be north of $ 20 million in TIV, and now I would consider $ 75 million as the measure of what's considered great.
Last year, there were markets delaying $ 20 million by location or by topic. These markets still exist this year, but they have to play well together to get us over the $ 75 million bump instead of going all the way down. I think two main buzzwords for cannabis traits you will hear over and over again this year are & # 39; risk spreading & # 39; and & # 39; excess property & # 39; to be.
IJ: What two or three tips do you have for brokers starting out in cannabis insurance?
Schutz: Ask questions, don't be shy, and find a mentor. We are still in the early stages of growth and available trading education specifically for cannabis insurance is scarce.
I think the nearly non-existent 2020 convention season also hampered training opportunities for different types of insurance professionals. We had numerus classes, presentations and panels that our boys took part in and most of them have been canceled permanently.
I know that these networking and educational opportunities were, and still are, crucial to my personal development. Find these events and talk to the speakers, they are eager to help and share the knowledge they have gained along the way. After all, we were all new too.
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