An insurer covering property in the West had a long-standing policy to not insure any cannabis businesses, but its underwriters suspected at least some cannabis risk had crept into the book of business. After all, a large number of cannabis businesses have opened in the region, and these businesses appeal to property owners because they can generate substantially more income than traditional businesses.
Like most insurers, the company had no way to efficiently check its book for the risk. There simply wasn’t time for an underwriter, or anyone else, to review the thousands of policies the insurer had written in states where growing marijuana is legal.
The insurance company learned that, as a WSRB Subscriber, it could request a review of its Washington state book for cannabis risk at no charge. The review would indicate whether each insured location was near a cannabis business, and the insurer could use that data to quickly estimate total insured value at risk.
After taking advantage of the service, the insurer was relieved to learn only a handful of cannabis growers had ended up in its book in Washington. However, the insurer remained concerned about its cannabis risk in other states, where cannabis operations are prevalent and the company insured a large number of properties.
The insurer invested in a book review for states outside Washington with Cannabis Check from BuildingMetrix, a subsidiary of WSRB, and found its concerns proved valid. Washington, it turned out, was just the tip of the iceberg. There were exponentially more cannabis-related properties in its book outside Washington state, and the estimated total insured value at risk topped $50 million. Just one partial loss on one property could push the line of business from profit to loss for the year.
The insurer then leveraged the locational data from the BuildingMetrix Cannabis Check to identify which policies required attention. Once the insurer confirmed that a property housed a cannabis grower or processor, it set the policy to non-renew and notified each agent well in advance of the appropriate date.
With the hidden risk revealed and eliminated, the insurer is now far more likely to achieve and maintain a desirable loss ratio and protect the long-term health of its products. All that was required was a fast, affordable check of its book.