Editor’s note: This is the first in a series of profiles on cannabis brokers, in which Insurance Journal explores why and how these folks got into the business, the ups and downs of insuring cannabis, as well as a few tips for those interested in a little professional development.
Stephanie Bozzuto is a third-generation insurance professional who not only saw an opportunity to make a living in cannabis, but to help do a little justice in an underserviced industry that she believes too often gets the raw end of things.
Bozzuto, who has 14 years of experience in business development, marketing strategy, and insurance coverage analysis, got into the business of insuring cannabis about five years ago and hasn’t looked back.
She is the co-founder of Cannabis Connect Insurance, a partner of Acrisure LLC, along with her brother Danny Bozzuto and Andrea Hering.
She has been a long-time legalization advocate, and often speaks on online platforms and on convention panels about insurance, loss prevention and compliance in the cannabis industry.
Bozzuto is also well-connected in the cannabis sector.
She’s a member of the Insurance and Cultivation Committee of the California Cannabis Industry Association, an executive board member of the Cannabis Chamber of Commerce, the secretary of the board for the San Diego Cannabis Industry Association, a board member of the San Diego Cannabis Industry, and is the vice chair of the Risk and Insurance Committee of the National Cannabis Industry Association.
She spoke with Insurance Journal about her experience as a cannabis broker.
Insurance Journal: Why did you get in the cannabis and insurance space?
Bozzuto: My family has been in the insurance industry for three generations now. Although I did dip my toe into other industries such as cosmetology and hospitality, I always came back to the insurance industry, it just came natural to me. After leaving the general agency side of the insurance industry, I got back into retail since I missed working directly with clients.
In 2016, our firm noticed the emerging cannabis industry was being significantly underserved. We’ve always been advocates of legal cannabis – I’ve personally had my own medical marijuana card for the last 10 years, so this was an industry we understood.
I would review insurance portfolios of new clients and would find total marijuana exclusions on a dispensary insurance policy. I also noticed that due to the old cannabis stigma, many insurance brokers were writing basic policies and neglecting to understand the complexities of the risk, exposures and coverage availabilities. I also noticed pricing was extremely high for limited coverage, while I’ve been working with different trade associations and the (California) Department of Insurance in hopes to see a change.
Price gouging is a real issue and some carriers are over-charging knowing they’re the only game in town, which is not right. I will continue to work on behalf of my clients. I feel their pain, I know their personal stories – many of us are friends. I feel personally obligated to do my best to see improvements in coverages and price.
IJ: Has this been a good financial decision so far?
Bozzuto: Yes. I believe so, but it doesn’t come quickly or easily. To this day, we believe servicing the cannabis industry is more service-heavy than most construction accounts. This is not an industry to dip your toe in either, you need to stay on top of new laws, regulations, policy forms, endorsements and exclusions, or you will have a difficult time keeping up. If you’re passionate about the cannabis industry, you want to help pave the way, then this will be a very rewarding industry for you. I absolutely love it and feel right at home.
IJ: What’s the hardest thing about the cannabis industry to deal with?
Bozzuto: All of the obstacles with underwriting. We have tremendous relationships with our carrier partners, however like any new industry, the underwriting is very heavy and the applications are lengthy. Insurance policies do not have an option to auto-renew the following year and a brand-new application is needed for each insurance carrier partner. Endorsements and other changes can be lengthy, and if you want great coverage, you’re going to pay a lot for it.
IJ: What insurance product is the most difficult to obtain for your cannabis industry clients? Why?
Bozzuto: I would say finding quality coverage for cannabis companies that are selling vape hardware or sourcing their vape equipment from overseas can be challenging.
Yes, there’s a market for it, but it’s not going to have all the bells and whistles you would expect. I would also say D&O (directors and officers) insurance and auto are problematic. They are both inflated in price with a limited supply of insurance carriers willing to write these risks.
Many D&O policies have a retention of $25,000 and up. If you’re a publicly traded cannabis company, you can see quotes with a $250,000 to $500,000 retention for a $1 million aggregate limit in coverage with a list of unfavorable exclusions too. For auto, you’re choices are slim and expensive.
IJ: What two or three tips do you have for brokers entering the business of insuring cannabis?
Bozzuto: If you are a generalist, this is not an industry for you. If you want to focus, take the time and become an expert in this new industry than this is the space for you. Roll up your sleeves and expect the next three to four years of your career focusing on building a reputation for yourself within the cannabis community and insurance industry.
It was the best decision I have ever made in my career. I would say if you’re passionate about cannabis like I am, then this is the industry for you.
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