We live in an ever-changing world. There is new technology, new products, and new thinking about a variety of topics that affect not only society as a whole, but the insurance industry particularly. Some are more obviously new risks, but others are existing risks that have changed to where the industry is taking steps to approach things differently. We provide links to our articles with further details.
Cannabis is a particularly popular and ever changing topic. At first states legalized medical marijuana, then recreational marijuana. This poses a tremendous problem for employers as the active ingredient, THC, can stay in the system for weeks after use, making employee drug tests problematic. An employer may have a zero drug tolerance policy but the state has legalized marijuana; how does an employer determine that the employee truly used the product off hours the way they used alcohol when it shows up in a random drug test? That’s one problem. Cannabis growers, processors and dispensaries have their own peculiar risks that must be addressed. ISO has developed exclusions for commercial lines of business and exclusions with an exception for hemp, which is different in nature. Likewise, AAIS has developed a BOP policy for cannabis companies. Medical and Adult Marijuana
As cannabis is still federally illegal, a senate bill has been proposed to make it easier for cannabis companies to obtain insurance. It is called the Clarifying Law Around the Insurance of Marijuana, and the bill defines various terms and outlines what cannabis-related businesses are, as well as outlining what Federal Agencies may or may not do regarding how insurers relate to cannabis-related businesses. AAIS developed a CannaBOP policy at the request of the California Insurance Department. It is similar to a standard BOP policy with language specific to certain cannabis related issues. Clarifying Law Around Insurance of Marijuana Act.
The U.S. Department of Agriculture (USDA) has just announced that hemp farmers who are operating under pilot programs that were authorized through the 2013 Farm Bill will be eligible for federal crop insurance in 2020. Those cultivating hemp under the 2018 version of the legislation can obtain coverage after regulations have been developed. Crop insurance is important for any farmer, as it provides coverage from natural disasters such as floods and droughts, or anything else affecting the ability to plant, grow, or harvest the crops. However this applies to hemp, not cannabis. Anything grown that contains more than 0.3 percent of THC is cannabis and not hemp. The two plants are related, but because of the psychoactive qualities of cannabis, it is treated differently than hemp.
A new twist to the cannabis industry is the serious and sometimes fatal infection that seems to be linked to cannabis vaping products that contain vitamin E acetate, although other contaminants may be a factor. While vitamin E acetate is often sold as a nutritional supplement or topical treatment, when aerosolized it can potentially decompose due to the high temperature needed to vaporize it, and when it cools inside the lungs, it is coating the lungs with oil. The lungs are delicate and are not able to process anything but gases. Many who have contracted this disease state that they vaped at least one cannabis containing product before becoming ill, although some had only vaped nicotine products, all had used a vaping product, and many had used both nicotine or marijuana products. While many report using suspected counterfeit products that are available in other states, an Oregon patient who died had used an e-cigarette containing marijuana oil he had bought from a legal dispensary. While it has not fully been determined that vitamin E acetate is the sole cause of the illness, it brings up a serious product liability issue for those manufacturing vaping cartridges. The addition of substances that have not been tested as vaping products even though considered safe in other delivery methods could become a serious issue. Five deaths from the illness have been reported, 450 possible cases have been reported from 33 states, and other reported lung illnesses are under investigation. Since the number of possible cases has doubled in a matter of days, the Centers for Disease Control is recommending that people not consider using e-cigarette products. One third of cases from Wisconsin and Illinois required ventilation. There is currently no limit on which additives state-approved manufacturers can add to their vapes, complicating the issue significantly.
Hemp is a related issue, and with the revision to the Farm Bill in 2018, the plant is legal as long as farmers comply with the rules and farming has quadrupled this year. The U.S. Department of Agriculture is expected to release its regulations for hemp growing soon, and once these rules are finalized state proposals allowing farmers to grow hemp on a large scale as a regular crop can be approved. Currently hemp farmers have become eligible for crop insurance, credit unions are allowed to maintain accounts for hemp businesses and the Environmental Protection Agency is reviewing applications for what pesticides can be safely used on hemp crops.
Gun violence has unfortunately been in the forefront of the country lately, with mass shootings in El Paso, Texas and Dayton, Ohio. When talking about preventing such occurrences, one of the first things that come up is requiring gun owners to maintain liability insurance. Unfortunately, that is not going to help, as liability coverage is only going to provide coverage for injuries to others for accidental shootings, not intentional acts. Even the policies designed specifically for gun owners that provide defense for the shooter apply only if the insured fired a weapon in self-defense, not if he went on a rampage at a theater or store. Violent Acts Expense Coverage The Truth about Liability Insurance and Guns.
However, there are coverages that can be purchased by organizations that help with costs related to violent acts. Over the past few years, policies have been developed to provide specific coverage to organizations commonly affected by mass shootings. Schools, churches, and shopping centers come to mind first, but anywhere with a number of people can become a target for a shooter. Workplaces, clinics, movie theaters and other locations may want such coverage. The coverage is often titled Violent Acts or Violent Event coverage, and these policies provide a variety of coverages including counseling, medical expenses, funeral expenses, extra security, substitute teacher, and additional transportation costs. Insurance When You Legally Carry a Weapon.
Autonomous vehicles have been talked about for a number of years, and now they are starting to appear on some roads in testing mode. Waymo has had test vehicles on the road in Phoenix and San Francisco, some using employees as test riders, as well as members of the public. Reviews on the quality of the rides were mixed, with some complaining of frequent stops and being late to work. There is talk of driverless fleets of trucks and ride shares, where a vehicle without a driver will pick up passengers and take them to their destination. Autonomous vehicles are hailed as being safer that human drivers and claims are made that they will significantly reduce the risk of accidents on the road. However, once the technology is perfected and such vehicles truly are regularly operating on the roads, there is still one complication. Insurance. Who is going to be responsible for a vehicle if it causes an accident while a human is not actively driving the vehicle? When manufacturers were first beginning to develop autonomous vehicles there was talk that the manufacturers would accept liability. However, that has not been solidified, and Japan has come out and said that the owner of the vehicle, even when not operating the vehicle, will be held liable. How this will be handled is the big question; will an individual with an autonomous vehicle be held liable if the vehicle causes an accident, or will it be a product liability claim against the manufacturer? Ride sharing companies face the same issue; will an accident be their responsibility, or that of the manufacturer? Fraud is also a consideration; will people try to blame the vehicle when they were actually controlling the vehicle? People already are trying to buy insurance online after they’ve had an accident and then file a claim after the effective date. Autonomous Vehicles Spring 2019. Florida Autonomous Vehicles Bill.
Fire is always a covered peril unless the insured started it himself or it is the result of war. However, with the historic wildfires over the past two years fire insurance is beginning to resemble flood insurance. Availability is starting to become an issue, and carriers are no longer writing coverage in areas too close to wildland urban interfaces or similar areas unless the insured has put strong and expensive mitigation measures in place in order to prevent damage from fire. Insurance departments are understandably concerned about availability and pricing of coverage for homeowners in those areas. The Montana insurance department has stated that carriers cannot deny coverage for policies in broad geographic areas if there is a wildfire in the same zip code or county; carriers can only refuse to write coverage if the property is near an active fire. The California insurance department is trying to get the governor to allow the department to force carriers to provide coverage as long as homeowners have taken the proper mitigation steps. The Aftermath of Wildfires.
Flood is not an emerging risk; however, with the regular, significant damage caused by flooding, the changes emerging in how flood is treated are important. ISO has developed standard personal and commercial flood policies, and FEMA is updating the flood maps while various analytic companies are creating their own flood maps, making it easier to predict which areas are truly apt to be impacted by flooding. In June, a comprehensive flood bill passed the house, which would renew NFIP until 2024. It includes a means test discounted premium for eligible households, allows for monthly premium payments instead of annual, sets aside funding for map revisions, provides funds for mitigation of properties as well as relocation of damaged property with the remaining land designated as open recreational space, wetlands or other space not subject to flood damage. NFIP An Overview. ISO Commercial Flood Policy. ISO Personal Flood Policy.
One thing is certain regarding hurricanes and tropical storms; the Caribbean countries will be hit. Maybe not in any particular given year, but the territory is where many storms either develop or increase in size and cause significant devastation. Being small countries, how to provide coverage for these catastrophes is problematic. In 2007 the first multi-country risk pool in the world, the Caribbean Catastrophe Risk Insurance Facility, was developed as an instrument to provide policies for such losses. The policies are parametric in nature. Once a triggering occurrence has occurred, a set amount is paid out for the loss. This is advantageous as funds can be paid out immediately with no investigation or disputes. Parametric, or index-based insurance, as it is sometimes called, is particularly useful for catastrophic losses such as hurricanes and earthquakes. One disadvantage is that a set amount is paid out, and it is not based on the actual damages that have occurred, only projected losses. The facility was restructured in 2014 into a segregated portfolio company (SPC) which allows it to segregate risk and expand into new products and geographic areas. Because of the quick payout, it helps small and developing countries survive major catastrophes.
Drones are far beyond being a child’s toy or a model aircraft. The growth of drones has been huge over the past several years, not just in private ownership but for businesses as well. At first the FAA struggled with how to regulate drones around airports and public spaces, fearing interference with passenger airplanes and injuries to the public. As drones became more available and less expensive, their use in various industries grew. Farmers started using them to survey crops, real estate professionals used them to make videos of properties for sale, and insurance companies started using them in claims. Drones allow adjusters to remain safely on the ground to review roof damage, allow them to view areas unsafe to enter physically, allow for faster claims processing and handling time, something that is critically important in times of catastrophic losses. If a fire area is unsafe for people, adjusters may be able to use drones to enter the area and begin estimating damages as soon as possible.
These are some of the emerging risks that we continually watch for changes and advances. Some issues change more rapidly than others do, and new issues may crop up at any time.