Assistant Vice President Nonprofit Nick Matsie's Podcast 'A Softer EPL Market for Dispensaries, But Claims are on the Rise.'
Recently, our Assistant Vice President of Non-Profit Liability Underwriting, Nick Matsie, met with Don Jergler, Podcaster of the series ‘Insuring Cannabis’, sponsored by Insurance Journal. In this interview, Nick highlights what is currently happening in the EPL space for dispensaries, including claim trends, a softer market as capacity grows and insurers get better at evaluating risks, and suggested best practices when underwriting for this unique line of business.
March 2025
To hear the full podcast, please listen here: https://www.insurancejournal.tv/videos/25023/
Below are some of the Podcasts highlights.
Background: This line of business started at Berkeley Select in 2019, focusing on cannabis insurance.
• Initial Challenges: Carriers were hesitant, making it hard to find adequate coverage and limits due to exclusionary language.
• EPL Exposures: Every company with employees faces Employment Practices Liability (EPL) exposures. Dispensaries are particularly vulnerable due to high turnover and heavy regulation.
• New Owners: Often lack knowledge of regulations, leading to potential claims from employees and third parties.
• Expansion: This line of business Initially insured only dispensaries, but now covers all cannabis business classes. The market has improved, offering better premiums, coverage, and limits.
• Claims Increase: There's an uptick in claims and payments, making EPL insurance more crucial.
Common EPL Exposures:
• Discrimination: Claims based on sex, age, race, etc.
• Wrongful Termination: Allegations of unjust firing.
• Harassment: Includes sexual harassment and hostile work environment.
• Retaliation: Claims of being fired for reporting regulatory violations.
• Wage and Hour Violations: Issues with employee classification, unpaid overtime, and missed breaks.
• Third-Party Coverage: Ensuring policies cover claims from customers or vendors, including ADA compliance.
Update on what types of claims Dispensaries are seeing:
• Claims Data: The data shows real exposures. Common claims include retaliation, sexual harassment, wrongful termination, and discrimination, often due to high turnover among hourly employees.
• Claims Increase: There's an uptick in both claims and payouts, influenced by social and economic inflation. Settlements for nuisance claims are rising.
• Documentation Issues: Lack of proper documentation makes it hard to dismiss claims quickly, leading to higher defense costs and potential bad jury verdicts.
• Wrongful Termination: Employees are fired for various reasons, but claims often arise from perceived unfair treatment. Proper documentation is crucial to defend against these claims.
• Market Dynamics: It's puzzling but manageable. The cannabis insurance environment remains beneficial despite these challenges.
What is Berkley Select seeing in Common Claims in EPL for Dispensaries?
Performance issues, policy violations, cultural fit, and attendance. Claims often stem from perceived unfair treatment, highlighting the importance of thorough documentation.
Employee Classification Issues with Claims in EPL:
• Misclassification: A major issue in dispensaries is often tied to wage and hour claims.
• Exempt vs. Nonexempt: Misclassifying employees as exempt (salaried) without meeting specific criteria can lead to unpaid overtime claims.
• Claims Impact: Misclassification can result in significant legal costs and potential class action suits, especially for larger organizations.
Advice for Brokers:
• Understand the Industry: Know the regulatory environment and challenges specific to cannabis businesses.
• Educate Clients: Explain common EPL exposures and the importance of EPL insurance, including data on payouts.
• HR Risk Management Services: Highlight the value of services included with EPL policies, such as HR handbooks and hotlines.
• Tailor Coverage: Customize policies based on the specific needs of each dispensary, ensuring no critical exclusions.
• Stay Updated: Keep abreast of evolving employment laws and regulations.
• Use Specialists: When in doubt, consult with experts or wholesale markets to access the best coverage options.
Other Berkley Select Resources for EPL Insureds
• Zywave: Our Risk Management partnership with Zywave is as an added value to all of our EPL insureds. Zywave provides HR resources & pre-claims assistance including an HR Hotline, compliance training including state mandated harassment training. and other robust resources for business owners ensuring everyday business compliance and best practices.
• In house claims team: Our claims team works in house with our underwriting team, most of which are licensed attorneys.
• A 32 year history in Professional Liability.
Disclaimer:
Berkley Select is a member company of W. R. Berkley Corporation, a Fortune 500 Company. The views expressed here are those of the author and do not necessarily represent the views of Berkley Select or W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued.