Can You Get a Marijuana Exec Coverage?

[IamChange]

We're looking at business buy-sell and key man agreements so chances are very high that the nature of the business is exposed - also I want this to be transparent and above board. My motivation here is pulling the industry forward while getting legitimate protection for my client, not just the commission check.

Based on the info I have right now our initial inquiry to underwriting staff was rejected by 36 carriers of various sizes. We put together a package to take to compliance in our main office and are asking for a review with our main carrier but approval, if it ever comes, will take time. In the mean time there's surplus lines (like petersen) but that's going to be a whole process. We also have the option to work with an out of state broker with medical industry experience who will want to be cut in and may even end up placing the policies with a surplus lines carrier anyway.

If anyone can throw me a bone and point me towards a carrier who will underwrite for an executive or group like this I'd be very grateful.

 

[IamChange]

While the issue is entertaining, from an underwriters point of view, the applicant works in a field that the federal law thinks it is illegal, so his income to pay for the future premiums is at higher risk. You would not insure someone who may end up in jail with no income.

Why not just insure that someone at a higher price? Chances are the policy is never going to pay out anyway. The US Treasury has issued guidance for financial companies to remain legal in the eyes of the law. What gives?

 

[walthamny]

Why not just insure that someone at a higher price? Chances are the policy is never going to pay out anyway. The US Treasury has issued guidance for financial companies to remain legal in the eyes of the law. What gives?

US Treasury has very little do with life insurance companies. They have nothing to do with how and who they underwrite their business. However, they have an interest in making sure everyone they underwrite can be accepted by their re-insurance pools. US treasury has again very little say in how these overseas re-insurance pools work. Insurance companies are motivated by profit, mutual or nor non-mutual. SO they have determined it is not worth underwriting these type of policies, it is not profitable to them. Higher premium does not mean they will take anyone at any price.

By the way, if Attorney General Jeff Sessions said that growing and selling pot is legal, may be insurance companies would insure them.

 

[VolAgent]

US Treasury has very little do with life insurance companies. They have nothing to do with how and who they underwrite their business. However, they have an interest in making sure everyone they underwrite can be accepted by their re-insurance pools. US treasury has again very little say in how these overseas re-insurance pools work. Insurance companies are motivated by profit, mutual or nor non-mutual. SO they have determined it is not worth underwriting these type of policies, it is not profitable to them. Higher premium does not mean they will take anyone at any price.

By the way, if Attorney General Jeff Sessions said that growing and selling pot is legal, may be insurance companies would insure them.

Well, the Treasury does have some say here. I don't follow this closely, but I understand that most marijuana related businesses are having a hard time getting their cash into the regular economy. Most banks won't touch it. So there are two ways this would be an issue. One, if the insurance company felt they could not accept it due to his involvement in what is an illegal enterprise as far as the US Government is concerned. And two, he has to be able to pay in an acceptable manner. Somehow he needs to get his money into a bank so he can pay the premium.

Again, I don't follow this closely. Maybe it is easier now for them to deposit their earnings and then pay their employees?

 

[IamChange]

My client has banking services - this is a bank that will accept their cash and allow them to write checks. We are also making some headway in finding property and casualty companies who will write product/general/property liability and builders risk policies for a legal medical marijuana business. IF these P&C insurance companies have no trouble accepting this money why are the life insurance companies turning out to be a stick in the mud?

So far we are striking out trying to find a life insurance or DI company who will work with us.

 

[scagnt83]

That would work in most cases but if he is a CEO making over 1 million dollars a year, they usually require more than just the job title. They also do more and more e-searches so chances are this guys name comes up under something other than herbal supplements. Hey, this why you should get some permanent insurance as a child if you can afford it. No such issues later on.

Not too much more in my experience. Of course it depends on how much is being applied for as well when it comes to financial documentation. But most financial documents do not describe what a business does other than whats implied by the business name.

They might ask what their job duties are in the PHI... but Ive never had anyone say they got in real deep about their business operations, especially for just a personal policy. And keeping the answers "general" would help imo.

If they do a web search then that could screw them up. Not sure how many are doing that these days. I know they are working on a lot of tech that does it automatically and cross-checks and verifies what was put on the app. Not sure how much of it is in realtime use right now.

Id be willing to bet the agent put "Medical Marijuana Shop Owner" in the occupation line. They should have just put "Business Owner".

 

[walthamny]

P&C companies have their own re-insurance pools and they will write a risk like this. Life companies won't. Life companies offer a product that has tremendous tax advantages. They will never want to piss off Congress and get attention to the huge tax breaks for life insurance. There is no such issue with P&C, they payments are generally taxable anything over book value. Well, if you write a 10 million life policy, it is almost always income tax free and could be even estate tax free. Why as an industry do something that will piss off Congress and take away the tax advantage. It is not worth it for just one policy.

Selling and growing pot in a state where it is legal is not money laundering by the way. It would not fit the definition legally. There is no intent to hide, the money is being reported and getting accounted for. If they were selling it for cash and not reporting as income, yeah.

Most re-insurance companies are located outside USA so US treasury will have near zero impact on how they do business and how they construct pools.

 

[VolAgent]

Selling and growing pot in a state where it is legal is not money laundering by the way. It would not fit the definition legally. There is no intent to hide, the money is being reported and getting accounted for. If they were selling it for cash and not reporting as income, yeah.

Never said it was. However, companies are not going to accept large amounts of cash or money orders. I was not aware that banks would accept money from pot shops now. That was my point, even thought it isn't money laundering, the form of payment does have to be acceptable to the company.