Editor’s Note: This installment of a biographical series on cannabis brokers, where Insurance Magazine explores why and how these people got into the business, the ups and downs of underwriting. cannabis tips, as well as some tips for those interested in a bit of professional growth.
Erich Schutz is a broker, underwriter and risk manager at NIF Group | Jencap, who focuses on the needs of the hemp and cannabis industries across the country.
Schutz specializes in hard-to-book multi-state cannabis insurance plans and has over a decade of experience providing solutions to the surplus and surplus line insurance industry.
He gave it a lot of thought before jumping into cannabis insurance a few years ago. But now there is little if any doubt about his enthusiasm for the industry.
Schutz, whose LinkedIn profile proudly shows off “Marijuan Insurance Ninja” as part of his headline, says taking up cannabis insurance was the “smartest career decision” he’s ever made. .
Schutz spoke to Insurance Magazine about his experience as a cannabis broker.
Insurance Magazine: Why did you get into the cannabis and insurance space?
Schutz: For starters, I am passionate about cannabis and I really love my job as an E&S Broker. I saw a huge gap in the market and knew I could bring my customer service-focused approach, insurance experience, market knowledge, and expertise to me. an industry segment that is underserved very much.
I came from a small regional wholesale brokerage and quickly realized that all the (so-called) heavyweights in the New England E&S brokerage space had no idea what they were doing in the insurance space. dangerous marijuana as well as most of them have no interest in learning. a new type of industry that is difficult to place in a very soft market.
At the time, Massachusetts, where I live, has become entertaining with dispensaries slated to open later in the year, and it looks like the Agricultural Improvement Act (Agriculture Bill 2018) is likely to be passed. passed, legalizing hemp at the federal level. My perception is that over 90% of cannabis insurance expertise is located in a handful of predominantly Western states. The table was set and no one around me seemed hungry or wanted to take a seat, so I put on my Red Lobster bib and started eating each of those cannabis-insured elephants a contract form.
IJ: Has this been a good financial decision so far?
Schutz: The grass is always greener as they say, but yes this is the smartest career decision I have made and have no regrets. It was not something I took lightly and discussed at length with my family and friends before I started. At the end of the day, the numbers speak for themselves financially but that’s not a problem for me.
Our team is building a brand that prides itself on doing what’s best for cannabis customers regardless of who gets a commission check – even though we all have bills to pay and bosses have to answer. That said, it is my loyalty to the cannabis plant that has given me a unique perspective and value proposition in the space.
IJ: What’s the hardest thing in the cannabis industry to deal with?
Schutz: As an industry, it’s an easy question to answer – traditional commercial banking and lending facilities. I don’t know of an intermittent leaf-touching operation that struggles with the dichotomy between federal bans and state legalization. I think someone should write a book and call it: “Cash? Where to get it and how to store it. A Cannabusiness Tale. “
On the insurance side, properties with high TIVs are the hardest thing to deal with for most agents and brokers. I would say that for those who are rushing into space, it is an insurmountable challenge and is creating a lot of unnecessary turmoil in the market, whether it is renewal or midterm.
That’s why at JenCap, our holistic approach starts with understanding your client’s growth strategy long before we choose a claimant or other people. propose. I can’t think of a bigger embarrassment than running out of TVs/space midterm due to expansion plans, but we always rescue midterm deals because of that. Plan. Prepare the. Prevent.
IJ: Which insurance product is the most difficult to obtain for customers in your cannabis industry? Why?
Schutz: High TIV property, none. Yes, workers compensation, D&O and networks only have a handful of markets and if you don’t have access to all of them it’s hard to be a one-stop cannabis brokerage, but the positions It’s really about managing expectations and accessing grit and creativity. Those qualities – plus a tough stomach – are necessary to successfully make it through the 2021 cannabis possession renewal season.
While COVID may have dampened some of the operating sales and growth prospects, we have not seen any renewals introduced in search of a TV lower than the expiration date. It’s actually quite the opposite. Last year we looked at a larger cannabis real estate location north of $20 million in TIV, and now I would consider $75 million as the benchmark for what counts as large.
Last year, there were markets that shelled out $20 million per location or were at risk. This year, those markets still exist, but they need to play well together to get us past $75 million instead of just hitting the bottom. I think the two main buzzwords about cannabis wealth that you will hear over and over again this year will be “spreading risk” and “excess wealth.”
IJ: What two or three pieces of advice do you have for brokers entering the cannabis insurance business?
Schutz: Ask questions, don’t be shy, and find a mentor. We are still in the early stages of development and the commercially available education specifically for cannabis insurance is limited.
I think the almost nonexistent 2020 convention season also hinders educational opportunities for insurance professionals of all kinds. We’ve had many classes, presentations and workshops that our friends have attended and almost all of them have been permanently cancelled.
I know these networking and educational opportunities were important to my personal growth and to this day. Find these facts and talk to the speakers, who are eager to help and share the knowledge they’ve gathered along the way. After all, we are all new at some point.
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