December 2021 - Competitive Edge Insurance

What to Know About Changes in Cannabis Insurance

The cannabis industry continues to grow every day. With this, comes a new space for industry coverage. In this article, we’ll discuss changes in cannabis insurance; including how the industry has evolved, cannabis business insurance challenges, and how to insure your high-risk business properly. Let’s dive in.

How Has the Cannabis Industry Evolved?

As we previously mentioned, the public’s reaction to cannabis has shifted time and time again throughout history. Even just ten years ago, one might’ve laughed if you told them that in 2020, cannabis sales would hit an all-time record of $17.5 billion. In fact, from just 2019 to 2020, the industry experienced a 46% increase in sales, according to Forbes.

To put things in perspective, according to PropertyCasualty360, cannabis sales may reach up to $37 billion by 2024, which means “the U.S. legal cannabis market would still outpace annual craft beer sales and generate more revenue than toothpaste, hard seltzer, and the NBA combined.”

The decision of many U.S. states to have made cannabis legal today is still controversial on some level.

While many people turned their noses up at cannabis being made legal, it’s interesting to remember that the drug actually “enjoyed a 5000 year history as a therapeutic agent across many cultures,” until the Marijuana Tax Act of 1937, which prohibited its use and sale.

The cannabis industry continues to evolve every day.

With the now booming cannabis market, comes a new space for industry coverage. There are unique cannabis business challenges, which we will discuss below. If you’re interested, however, in the difference between cannabis and hemp insurance, read on here.

Challenges with Cannabis Insurance

One particular challenge of the emerging cannabis industry is properly insuring your cannabis business. According to Yahoo Finance, cannabis insurance “help[s] strengthen and legitimize marijuana-focused businesses. It protects them against:

Crime
Vandalism
Property damage
Other unfortunate events”

Insurance is essential to protecting any cannabis company as it minimizes liability and risk exposure. But that doesn’t mean it’s easy to find the right coverage.

“The good news is the cannabis insurance industry has come a long way in a short time,” says Ian Stewart, founder and chair of the national cannabis and hemp law practice at Wilson Elser.

“These days it is not so much about whether companies can obtain coverage, but more about what lines are available and the limits,” says Stewart. “The variety of insurance vehicles is expanding.”

These varieties include:

Property and casualty lines
General commercial insurance
Product liability

As the cannabis industry continues to grow, we gain a better understanding of how it works and it’s loss history.

More difficult coverage types to write for cannabis businesses, according to Stewart, include:

Employment
Cyber,
Errors and Omissions (E&O) policies
Specialty lines (i.e. crop coverage)
Auto policies (for companies who deliver cannabis products)

How to Insure Your Cannabis Business

Cannabis insurance falls into the realm of high-risk insurance. According to PropertyCasualty360, “insurers that provide coverage to cannabis businesses engaged specifically in selling marijuana can be criminally liable for aiding and abetting in the sale of marijuana or conspiring to violate the CSA — even when the business’s activity is legal under state law. Further, intrastate issues may also cause complications if marijuana is not regulated uniformly within a state.”

For these reasons, it can be more difficult to find proper coverage.

Legal cannabis companies require specific cannabis insurance expertise. Since the industry is still blooming, there are not as many experts as one would yet hope for.

The most important part of insuring your cannabis business is working with a knowledgeable insurance provider, one who understands the specific needs of your high-risk business.

Depending on whether you’re a dispensary, cannabis manufacturer, cultivator, delivery business, physician, or so on, all of these branches face a different set of challenges, which, in turn, require different cannabis insurance policies.

These insurance policies, according to Embroker, might include:

General Liability
Product Liability
Commercial Property
Workers Compensation
Business Income Coverage
Cyber Liability
Errors & Omissions and Technology E&O
Crop Coverage
Commercial Auto
Cargo and Inland Marine
Loss of Income
The list goes on!

The steps to insuring your cannabis business can seem daunting. That’s why we recommend you enlist a trusted expert who has experience insuring this high-risk industry. This way, you can partner with someone who understands the specific needs of your cannabis business to create an effective risk management strategy.
Contact Brenda Jo and her team at Competitive Edge to learn more.

Certificates of Insurance (COIs): What You Need to Know

in General Business Insurance, Video

In any project, it’s important to make sure you have the proper insurance to protect yourself and all parties involved.

Let’s say you’ve just hired a plumber. Before he gets to work, you want to make sure the plumber’s insurance coverage will cover any potential damage to your house. If you are listed as an additional insured, their insurance will pay for any damages that occur.

But how do you find out what coverage the plumber has in the first place? Contracts need to be reviewed so that insurance brokers can know the terms and scope of their requirements. This is where certificates of insurance (COIs) come into play.

Every contract with a vendor or a customer will have an indemnity or insurance section of what they want to see from you as far as insurance is concerned. This includes documents that extend your policy to cover them. Those requirements are contractually driven, which means a certificate is necessary.

Let’s have a professional detail of the complexities.

In this video, Brenda Jo Robyn, founder of Competitive Edge Insurance, will answer everything you need to know about COIs.

What is a Certificate of Insurance?

A Certificate of Insurance (COI) is a snapshot in time of insurance coverages for an insured.

According to Investopedia, a certificate of insurance is a document “issued by an insurance company or broker [that] verifies the existence of an insurance policy.”

“Small-business owners and contractors typically require a COI that grants protection against liability for workplace accidents or injuries to conduct business.”

A COI gives a summary of what coverages someone has, whether it be general liability, workers’ compensation, or property. A COI can also include a description of coverages that might be there or attached; such as additional insured status or waivers of subrogation.

How Often Do You Need to Update a COI?

Any time there is a change in the policy in terms of limits of insurance and/or coverage dates.

Another time you might need an updated certificate of insurance is if there’s a new project or project location for a particular client.

Why Do We Need a Copy of Your Contract to Issue a Certificate?

In terms of contractors, projects, or building owners, you spend a lot of time and effort trying to win work. The last thing you’re looking at is insurance conditions. Insurance conditions are most often reviewed last—if at all.

When this is the case, conditions that are additional in cost can pop up. These conditions are often impossible to obtain and can impede your ability to sign contracts and get work at all.

A Real-Life Example

Here’s a real-life example of why COIs are so important from Brenda Jo Robyn, founder of Competitive Edge Insurance.

“One of my contractors sent me a certificate that they needed for a new job.” It was a huge job: an HOA, residential complex of 70 buildings with 40 units in each building.

“So they sent the request over,” says Brenda Jo. “We completed it, sent it back, and all of a sudden there’s an email back saying, ‘Hey, can you comply with these? The certificate doesn’t share that the insurance covers that we require.’”

“The party then sent us a sample certificate that they wanted to be done. This sample required two million more in limits than my client had, [and] they weren’t going to be let on the project as a result.” This was an $18,000 mistake.

Brenda Jo continues. “They signed the contract [and] the requirements were in the contract, [but] they only sent me the request for a certificate of insurance.”

In this example, if Brenda Jo would have been able to see this requirement beforehand, the terms could have been either negotiated or the necessary coverage could have been obtained.

Brenda Jo reminds us, “you know, every contract is negotiable.”

On the topic of contracts, are you interested in learning about contract bonds? If the answer is yes, read on here.

How the California Labor Shortage Is Affecting the Construction Industry

in Construction, News

For anyone in California who has taken a stroll around town lately, you’ve likely noticed the myriad ‘now hiring’ signs every way you look. Restaurants and retail stores are experiencing obvious shortages, but the construction industry is especially feeling the deficit of ready labor right now.

Let’s talk about how the California labor shortage is affecting the construction industry.

Why Is There a Labor Shortage in California?

When asked about the California labor shortage, Brenda Jo Robyn, founder of Competitive Edge Insurance, said this:

“You can see labor shortages everywhere,” says Brenda Jo. “The shortage of skilled labor is getting tighter and tighter.”

But why? There are many factors that contribute to the labor shortage we are experiencing as a nation right now. According to economists at CNBC, some reasons include:

Aging
Retiring workers
Border control and immigration limits
Demands for better pay and working arrangements
Workers leaving California due to increased housing costs
And more

The labor shortage in the construction industry specifically, however, is not only a California issue.

A Larger Issue at Hand

According to the Associated General Contractors of America (AGC) and Autodesk, “78% of construction companies are having difficulty hiring construction workers.”

Some of the most difficult positions to fill, according to NBC San Diego, include:

Drywallers
Pipelayers
Carpenters
Sheet metal workers
Plumbers
Bricklayers

Even if a wave of individuals wanted to get into the construction field right now, it takes a great deal of time to become proficient in many of these jobs. Not to mention the time required to receive proper licensure from the California Contractors State License Board (CSLB).

But construction projects need laborers now.

Some companies have even had to turn to out-of-state workers, bringing them in for individual projects to meet demands.

The Construction Industry During COVID and Today

california labor shortage construction industry

Contractors have managed to stay busy during the COVID-19 pandemic. How? It was the perfect time for construction projects to thrive last summer considering a few elements working in combination:

The high volume of money made available to contractors from the government
Historically low-interest rates
The massive sell-off of homes

In fact, as soon as things were deemed “safe enough,” many homeowners and business owners jumped on the opportunity to renovate their properties. Think kitchen remodels, backyard updates, you name it.

But now, the supply can’t meet the high demand.

In an article written by Fox, contractor Michael Wolff was interviewed. “I would pay a ridiculous amount of money to get a qualified person in here. I would hire 15 people today,” said Wolff. He, like many other contractors, acknowledges that many qualified laborers have preferred to stay at home on unemployment or stimulus or work under the table.

Increased Costs

Brenda Jo of Competitive Edge elaborates on the trickle-down effect of the labor shortage. As a result, the construction industry is hiking up costs to complete projects in an efficient manner.

Brenda Jo explains: “When there’s a shortage, that means there’s a competition. When there’s a competition, wages go up in that industry or that skillset.” All in all, projects cost more.

She continues with the two options contractors are faced with. “Either the employer can’t find enough labor so the job takes longer or you contract more laborers, shortening your project time, but increasing costs,” says Brenda Jo. “There’s a fine balance between those.” And, as we’ve observed, it’s a difficult balance to strike.

The Construction Industry: Looking Forward

The need for skilled laborers across the U.S. will continue to increase in the coming years. In fact, there will be an 11% increase between 2016 and 2026, bringing an additional 747,600 industry jobs to fill.

Today, fewer and fewer children are exposed to the construction world—which, in turn, will further drag out the shortage. Only 3% of people ages 18 to 25 wanted to work in construction, according to an article done by Builder in 2017.

Moreover, “for every five workers retiring, [there is] only one coming in,” according to Robin Bartholow, Builders Exchange Workforce Development Director.

The facts considered, the shortage does not appear to be ending anytime soon. 45% of companies surveyed by AGC reported that they anticipate continuing difficulty in hiring craft and salaried workers.

According to The Los Angeles Times, the construction workers union is partnering with the U.S. government to craft new legislation in hopes of providing:

Minimum pay
Benefits
Training

Immigration reform is an additional solution that could allow skilled, out-of-country workers to aid the shortage, according to the San Francisco Chronicle.

For those who are not a part of the construction workers union, a higher emphasis on training and educating younger generations about careers in construction could help solve the labor shortage in the long run.

Read on to learn what to expect from changing contractor costs as a result of both labor shortages and shipping delays from Brenda Jo Robyn, founder of Competitive Edge Insurance herself.

What Mandating the Vaccine Might Mean for Your Business Insurance

in General Business Insurance, Health & Wellness, News

Business owners have experienced unforeseen challenges as a result of the last nearly two years in a global pandemic.

The conversation surrounding the ethics of requiring vaccines has been floating around the workplace for about just as long.

In September 2021, however, President Joe Biden directed the Occupational Safety and Health Administration (OSHA) to introduce an emergency temporary standard (ETS) that requires companies with 100 or more employees to ensure all employees are:

Fully vaccinated
Or, that they submit to weekly testing and mandatory masking

*As of November 17th, however, OSHA has paused all vaccine mandates “after a federal appeals court upheld a stay.”

Regardless, it is still top of mind for employees. Here’s what mandating the vaccine might mean for your business insurance along with how you can prepare if the mandate is passed.

Who Would This Mandate Affect?

According to The New York Times, companies with 100 or more employees would “have until Jan. 4 to ensure all their workers are either fully vaccinated or submit to weekly testing and mandatory masking.”

This measure would be enforced to promote workplace health and safety and will affect “some 84 million private-sector workers across the country, including some 31 million who are believed to be unvaccinated.”

If the mandate comes into play, OSHA anticipates the ETS will be in effect for six months depending on COVID-19 statistics.

When Did This Mandate Come About?

“The measure was announced by President Biden in September [2021], and details were released on Nov. 4 by the Labor Department’s Occupational Safety and Health Administration [OSHA],” according to The Times.

COVID, ELP, and EPLI

First things first, what is Employer’s Liability Insurance? This form of insurance “protects your business when an employee sues over a work injury or illness,” according to Insureon. It is especially important, considering “almost one in five small businesses will face employee litigation” at some point.

Equally as important to consider is Employment Practices Liability Insurance (EPLI), which is insurance that “provides coverage to employers against claims made by employees.”

With the potential vaccine mandate, we can anticipate an increase in EPLI claims. As a result, we might see EPLI premiums increase. Kyle Jeziorski, Executive Vice President at Founder Shield offered insight: “I think insurers will try to add COVID-19 exclusions to EPLI policies and potentially offer the coverage for an additional premium.”

It’s definitely something we here at Competitive Edge Insurance will continue to keep a pulse on.

How Responsible Are Businesses for the Spread of COVID?

During the onset of COVID, many employees wondered to what extent businesses and business owners should be held liable if an employee were to contract COVID-19 on the job and suffer sickness or even death as a result.

The answer today is still clear as mud.

There are, however, steps your business can (and should) take to prepare for these newly introduced COVID-19 vaccine mandates.

Steps Your Business Can Take to Prepare

Business Insurance tells us that now is the time that businesses should prepare U.S. Equal Employment Opportunity Commission processes as well as human resources (HR) departments for what lies ahead.

As we well know, there are many employees across the U.S. who will request exemptions from receiving the COVID-19 vaccine due to religious or health reasons. This process, called an ‘interactive process,’ can take weeks or even months.

For businesses, this can be a lot added on their plates—especially if they receive a high number of requested exemptions.

Businesses should know this ahead of time and prepare accordingly.

Erect a Framework in Advance

“Businesses owe it to themselves to put together a framework to manage this,” says Chuck Kable, Chief Legal Officer and Chief Human Resources Officer at Axiom Medical. “You have to have a protocol and a process that you have to administer consistently and over time, and you have to treat everybody equally.”

If businesses fail to do so, this is when liabilities begin to pop up.

“Any mishandling of an exemption request can run afoul of anti-discrimination laws,” says Adam Kempe of Kelley Kronenberg. Companies might face various liabilities including:

Failure to maintain and keep private workers’ health information
Failure to follow steps in Equal Employment Opportunity Commission (EEOC) exemption requests

Consider OSHA Fines

If the headache of one of your employees filing a claim with OSHA as a result of your negligence isn’t enough motivation to get your ducks in a line, consider the hefty OSHA fines you might face.

If a complaint is filed, the first thing OSHA is going to look for is your current OSHA Covid Protection Procedures that are in place, which includes your Injury and Illness Prevention Program (IIPP). All employers are required to have IIPPs in place.

OSHA fines can be especially detrimental to your company’s financials because while OSHA personnel might come in looking for one thing, chances are they will do some digging, which could lead to additional fines or penalties. OSHA, in that sense, is similar to the IRS—except for employers.

Employee Screenings

A final precaution that employers should take, according to Brenda Jo Robyn, founder of Competitive Edge Insurance, is to conduct thorough employee screenings.

Brenda Jo also acknowledges that it may be the case that many people will choose to not work as a result of this mandate.

“You can find out a lot about an employee or potential employee from a screening,” says Brenda Jo. “Be sure to look at their workers’ compensation claims and do reference checks.”

Take advantage of not only their most recent reference but reach out to prior references as well.

A Final Word

With this potential vaccine mandate firing up, it’s especially important for employers to be on their A-game as far as safety procedures and insurance are concerned.

“There’s nothing that prevents a company, especially one not familiar with these issues, from now bringing in appropriate HR personnel, a consultant, or employment counsel to understand what to expect,” says Kempe of Kelley Kronenberg.

On the topic of vaccines, did you know that Brenda Jo Robyn, founder of Competitive Edge, began her career as an Epidemiologist who specialized in immunizations? To hear more about vaccines, specifically, her passion for Polio research, visit this blog post.