Welcome to iLeads Insurance Market Minute, where we bring you the latest, most relevant news regarding the insurance market. Last week you were reading What I’ve Learned From Working In Insurance. This week we’re bringing you:
Cannabis insurance market set to soar under Biden administration*
The cannabis market in the US got some uplifting news last week when officials in New York finalized a deal to legalize recreational marijuana in the state, opening the doors for a $4.2 billion industry, according to The New York Times.
The announcement is, however, just one of the many developments that will likely help spur this growing market. The impact of the pandemic on the cannabis industry, for instance, was another positive step. As it turned out, many states’ approach to this marketplace and deeming it an ‘essential’ one during shutdowns has shown the validity of its offerings.
“Those on the medical [side of the business] were able to continue operating, and I think that was a big eye opener to a lot of individuals … that see this is a real industry now,” said Max Meade (pictured), cannabis insurance advisor at Brown & Brown. “The fact that it was essential through all of this craziness shows that it’s an industry that needs to be around and that people, especially on the patient side, are benefiting from it.”
Yet, the key development that is set to have a positive impact on the cannabis industry has been the position of the Biden administration on legalization, which Meade predicts could put the de-scheduling of marijuana on the table, alongside other legislation focused on helping out growers and sellers.
“There’s more optimism now and an assumption that they’re going to work to pass some of these bills that have been in motion for a while now, but never hit the point of actually moving forward,” said Meade. “I’m also seeing more conversations around working to bundle some of these bills that they’ve been talking about and do a larger cannabis reform.”
Those bills include the proposed Safe Banking Act and Small Business Tax Equity Act, which would impact the cannabis industry in different ways.
Reinsurance capital rises 6.9% in 2020: Willis Re*
Dedicated reinsurance capital totaled $658 billion globally at the end of 2020, up 6.9% from 2019, according to a report Monday from Willis Re, the reinsurance business of Willis Towers Watson PLC.
The increase was due to added capital from both existing reinsurers and new entrants, Willis Re said.
Alternative capital slipped to $90 billion from $91 billion year over year.
Premium growth among those companies that provide the relevant disclosures was 9%, driven by the rising pricing environment. The combined ratio for this group deteriorated “materially” in 2020, from 100.6% to 104.1%, Willis data showed.
This was the second-highest combined ratio since 2014, with only 2017 higher at 107.4%.
While alternative capital slipped slightly year over year to $90 billion from $91 billion in 2019, it did bounce back a little from $88 billion as of the end of June 2020.
Likewise, the overall rise in capital came after a first-quarter decline and proved a surprise, Willis Re said.
Insurance comparison website The Zebra raises $150 million in latest financing round*
The Zebra, a home and auto insurance comparison website, has raised $150 million in a Series D fundraising round, which valued the company at over $1 billion.
Investors in the insurance comparison service include Accel, Silverton Partners, Ballast Point Ventures, Daher Capital, Floodgate Fund, Weatherford Capital, KDT, The Zebra’s own CEO Keith Melnick, and others.
A company release said that The Zebra has raised over $250 million to date, including seed funding.
“This investment is going to be used to grow our team and build our brand. We are accelerating our efforts to make The Zebra a household name and help educate, empower and advise consumers to find the best policies for their unique needs, no matter where they are in their lives,” said The Zebra CEO Keith Melnick.
“As one of the earliest investors in The Zebra, this inflection point in the company’s history is something I’ve been eagerly anticipating,” commented Mark Cuban, entrepreneur and governor of the Dallas Mavericks.
Cuban added in a statement that the word “startup” no longer applies to The Zebra, calling the company a “full-fledged tech company that is taking on – and solving – some of the biggest challenges in the $638 billion insurance industry.”
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