The famous insurance marketplace Lloyd's of London is pulling out of the cannabis insurance business. That’s surprised agents in Oregon who’ve used Lloyd's for almost a decade to insure medical marijuana businesses.
“It had been one of the oldest programs in the country," said Todd Foster, an agent with .
Foster's company has offices in Portland, Medford and Bend and provides liability, property and inventory insurance to a wide range of clients -- from warehouse grow operations to marijunana gelato makers.
According to Marijuana Business Daily, in a memo explaining the decision, Lloyd's cited the conflict between federal and state law in the United States. The company concluded that money stemming from legal state marijuana sales could be subject to federal anti-money laundering laws.
Foster said about 30 of his clients are insured through Lloyd's. The policies protect against risks like general business liability — for example, a customer slipping and falling — and property and inventory loss from fire or robbery.
Foster hasn't yet heard whether Lloyd's will actively cancel policies or will not renew them when they expire. He is working to switch his clients over to five other insurers who are willing to work with cannabis businesses. The only one Foster is willing to name is Hannover Re of Germany, a large insurer that recently launched a marijuana program to compete with Lloyd's.
“The other four I’m going to keep close to my chest," Foster said.
Amy Margolis, a cannabis and a lobbyist, said the timing of Lloyd's decision creates a challenge in Oregon where many people are preparing for a legal market and trying to legitimize their businesses. She expects the OLCC will require legal cannabis businesses to carry liability coverage. That's among the requirements established in Washington state.
“You can tack this issue up along with the banking issue. We’re asking cannabis businesses to be active participants in a traditional business market. They can’t access banking and now it has become much more difficult to access insurance,” she said.
Copyright 2015 Oregon Public Broadcasting
