Regulations

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Navigating the complex landscape of California’s insurance regulations, particularly when dealing with non-admitted insurers, is a challenge many policyholders face. At the heart of the non-admitted insurer challenge lies a powerful but underutilized tool: The Unauthorized Insurers Process Act, codified at California Insurance Code Section 1610, et seq. Section 1616, is a key component of the Act and yet is often overlooked by policyholders faced with a coverage dispute involving a non-admitted insurer.  

Admitted versus non-admitted insurers in California

An “admitted” or “licensed” insurer is an insurance company that must file its rates with the Department of Insurance (“DOI”) and is required to participate in the California Insurance Guarantee Association (“CIGA”). In the event that an admitted insurer becomes insolvent, CIGA is supposed to step in and pay covered claims, subject to various statutory limitations. 

Conversely, a “non-admitted” or “surplus lines” insurer is allowed to conduct business in California but is not required to file its rates with the DOI and is not a member of CIGA. By not filing rates with the DOI, non-admitted insurers sometimes have more flexibility in the coverage offered and the prices charged.  The DOI maintains a List of Approved Surplus Lines Insurers (“LASLI”) that has met certain capitalization requirements, but the DOI also permits non-U.S. domiciled alien insurers to issue coverage in California that has not met those standards. Thus, the financial strength and stability of a non-admitted insurer can sometimes be significant issues.Continue Reading Empowering policyholders: Forcing non-admitted insurers to post a bond before answering a complaint

Like any business, a business operating in the U.S. cannabis industry needs both first-party and third-party liability insurance.  Unlike other types of businesses, however, a cannabis-related business’ insurance needs may be dictated at least in part by state regulations.  Although not every state that has legalized cannabis for medical and/or adult use has promulgated specific insurance requirements for this industry, a number of states, via their cannabis regulations, have done so.  Accordingly, it is imperative for any cannabis-related business to carefully review the regulations in each jurisdiction in which it does business to ensure that it has obtained all required insurance.
Continue Reading Review state cannabis regulations for insurance requirements

As part of its “adult-use” marijuana regulations, which are expected to take effect next week, the Commonwealth of Massachusetts will require that “Marijuana Establishments” – which include cultivators, manufacturers, and retailers – procure commercial liability insurance in established amounts. Massachusetts’ new regulations are the most recent reminder that cannabis-related businesses must be aware of state regulations and their insurance requirements.

On March 9, 2018, Massachusetts’ Cannabis Control Commission (the “Commission”) “filed its finalized regulations” intended to govern the Commonwealth’s adult-use marijuana industry with the Commonwealth’s Secretary of State. The “regulations are not yet in effect. … The regulations will become effective when published in the Massachusetts Register.” They “are on track to be published on March 23, 2018.”Continue Reading Final Mass. “adult-use” marijuana regulations require “Marijuana Establishments” to have liability insurance

Pennsylvania’s burgeoning medical-marijuana industry is and will be carefully regulated. When purchasing insurance, medical-marijuana dispensaries should pay careful attention to the Commonwealth’s regulations, in particular to the regulations relating specifically to dispensaries. Pennsylvania’s medical-marijuana regulations are only temporary, and most of them (including the ones relating to dispensaries) will expire in 2018

Certain of those regulations directly address insurance. For example, Pennsylvania requires that dispensaries “obtain and maintain an appropriate amount of insurance coverage that insures the site and facility and equipment used in the operation of the facility.” 28 Pa. Code § 1141.44(a). “An adequate amount of comprehensive liability insurance covering the [dispensary’s] activities authorized by the permit shall begin on the date the initial permit is issued by the Department and continuing for as long as the [dispensary] is operating under the permit.” Id.

Pennsylvania also requires that all dispensaries “obtain and maintain workers’ compensation insurance coverage for employees at the time the [dispensary] is determined to be operational by the Department.” 28 Pa. Code § 1141.44(b).
Continue Reading When Assessing Insurance Needs, Medical-Marijuana Dispensaries Must Consider Pennsylvania Regulations