Entering cannabis insurance? ‘Start simple, go back to basics’

But for Fady Kamel (pictured), managing partner at the Erin Mills branch of All-Risks Insurance Brokers Limited, brokers can approach the market with an uncomplicated mindset.

“For us, it was important to keep it simple, especially since it’s still a new industry,” Kamel said.

“We ask a lot of questions and just go back to the basics of insurance; we start with what [clients] have today and what they need.”

Blooming with opportunities

Kamel, who is set to speak at the upcoming Specialty Insurance Summit, first saw a risk management opportunity in the cannabis space in 2014. One of his friends opened a licensed medical cannabis facility in Toronto and reached out to Kamel for insurance coverage.

“The first policy that we worked on with them was just a unit under renovations and construction or builders risk policy. The next steps were more challenging and interesting,” he said.

Looking at the 70,000-square foot warehouse, Kamel saw the potential to cater to an up-and-coming market.

“That piqued my interest nice and early, even before legalization made me realize that there’s a big need coming for cannabis producers and businesses,” he told Insurance Business.

“It was finding out and determining what they’re going need over the next couple of months as they start to build out their entire business, not just the facility.

“It was fun to discover all their different needs and figuring out the next steps.”

After several years as a commercial underwriter at Aviva and Travelers, Kamel jumped into the brokering side of insurance in 2015, developing a highly specialized view of insurance and risk within the cannabis industry.

“It was perfect timing,” he said.

Kamel will among several panelists sharing their insights on understanding and meeting the emerging needs of SMEs at the Specialty Insurance Summit on April 27 in Toronto.

The event will gather the some of the biggest names in Canada’s specialty insurance landscape to help brokers connect with managing general agents (MGAs) and stay on top of changing consumer demands.

Going back to basics

Having worked with large international and national licensed producers, retailers, and other businesses, Kamel has built a reputation for being a “go-to” guy for cannabis insurance.

His advice for brokers who are only starting to get to know the market? Go back to basics.

“Like any type of large manufacturing facility, you’re going to have fire and different types of physical property risks with the bigger producers,” he said.

“With smaller, day-to-day retail stores or cannabis dispensaries, the risk is not as big for something like fire or an electrical issue, but more on protection for theft or slips and falls.

“Whether its cannabis or any other product, those primary retail risks don’t change.”

Canada legalized cannabis for recreational use of adults in 2018. As the legal cannabis industry grew, so did the insurance market – and with that came growing pains, according to Kamel.

“Prior to legalization, [the market] just didn’t exist. There was no need for any type of liability for cannabis. For example, product recall coverage has been around for years for many different types of industries. But for cannabis, there was no such thing,” he said.

“We were working with underwriters to figure out what pricing looks like and what deductibles look like. We were all on the same page working through it together.”

Cannabis as a global market

While it’s still early days for the cannabis industry, Kamel is confident about the market growing, not just in Canada, but globally.

“This is something that’s going be here for years, and eventually, we’ll see other countries start to realize the benefits of cannabis,” he said.

“There’s a big opportunity here; Canada is at the forefront of it, but I believe it’s going to be a worldwide traded product.”

Brokers tempted to capitalize on the potentials of the cannabis market may be jarred by new coverages and risks, but they shouldn’t be put off by the complexity.

“Do your homework, do your research, and understand what your consumers and clients are going through in the industry,” Kamel said. “Understanding their challenges before diving in will help you better take care of your clients.

“Everybody starts somewhere, but how you prepare makes a difference.”

The Specialty Insurance Summit is all set for April 27, 2023 at the Arcadian Loft Toronto. Don’t miss a chance to learn about emerging specialty risks and network with hundreds of industry leaders. Register now.