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When marijuana collides with the claims industry.

Byline: Susan Daniels, Mike Neroda

Marijuana retailers are part of a small community. They have regular and sometimes unusual customers. The industry is presenting opportunities for companies to provide support to marijuana businesses. From banking to transportation, there are significant challenges for this new and controversial business sector.

As an alternative to opioid misuse and abuse, this sector is growing, quite literally. Like all businesses, there are significant investments of time and resources required. With that comes the need to protect that investment with insurance policies tailored to fit the customer's need.

Insuring marijuana risks

From the acceptance of risk by insurance companies and written policies come the natural potential for subsequent claims. These businesses are susceptible to claims to their buildings and their inventory. They will also be likely targets for claims for liability to others arising out of their normal operations. Claims professionals must be prepared to assess risks and exposures and address these unique insurance customer needs.

In a recent exposure for a legalized marijuana retailer, a customer presented a complaint to a store manager about a product he purchased at the establishment. The customer was dissatisfied with the product. The manager attempted to address the concern and provide alternatives.

The customer remained dissatisfied and continued to become more agitated. The manager kept a calm demeanor and politely asked the customer to leave. When the customer chose not to leave, the manager threatened to call the police.

At that point, another customer stepped in. This customer verbally engaged the troubled customer, eventually convincing him to go outside. Once outside, words continued to be exchanged. A store employee was nearby and witnessed the exchange between the angry customer and the regular customer. In full view of the surveillance camera, the angry customer threw a punch at the regular customer. The police arrived shortly after and the altercation was contained.

The proliferation of marijuana grow operations and retailers is creating a host of new claims that require careful investigation. (Photo: Shutterstock)

Keys to investigating cannabis claims

Thankfully, claims adjusters are prepared to get out in the field to investigate these exposures. With good reason, this insurer outsourced the investigation to an independent insurance adjuster to investigate the reported liability exposure.

Hire an independent adjuster for field investigation. Local experienced independent adjusters are a wise investment for a good field investigation.

Investigate thoroughly and secure relevant evidence. Our firm had the opportunity to investigate just such a claim. This retailer proved to have a reasonable system in place to provide a solid foundation for the investigation.

Following an investigation of the parties and available evidence, the results presented evidence of professional communications by the business manager. The manager had dealt with a dissatisfied customer with calm, direct communication. They practiced healthy boundaries and did not escalate, even when the customer did. They attempted reasonable conflict resolution strategies, including concluding business interactions. They employed safety standards to seek removal of a risk and a call to law enforcement when escalation occurred.

The business had several angles from their surveillance cameras to assist in corroborating the events. They appeared to have a good rapport with the local authorities. This proved helpful when we requested the investigative materials.

We recognized that the results of the police investigation of the incident would be helpful and made a request for all investigative materials related to the matter, not just the police report. We successfully received the body camera footage from the responding officers.

Police officers do an excellent job of transferring the events of an incident to paper. As we know in investigating claims, sometimes things are lost, or lost in translation between memory and paper. In this case, with the receipt of the actual body camera footage, we could observe the demeanor of all parties interacting with the police.

This footage can be crucial when a jury or other decision maker is evaluating the credibility of one participant or witness over another. Along with demeanor, the body camera footage provided an accurate account of statements made in the presence of the recording officer.

Weigh Credibility. The credibility of a witness or participant in the incident can be called into question or ultimately result in an unfavorable decision. Many people already have a negative opinion of the marijuana industry. Given this perception, it is imperative that retailers of this nature conduct business with the utmost professionalism. For a business that may start out with a perceived uphill journey to establish credibility, the interactions as well as the surveillance footage and statements from the retailer painted a picture of a competent professional.

Know your jurisdiction. Decision makers must understand how the relevant jurisdiction weighs reputation and credibility, and comply with all legal standards. Testing actions and conduct to a reasonable man standard is important. The question must be, what is the wording of the law?

We are responsible to follow the dictates of the law. Businesses, including insurance professionals, must also stay knowledgeable of critical incident preparedness and risk management best practices to ensure those employed, as well as our own strategies in conflict resolution are consistent with those local boards, courts and even local divisions of insurance would find reasonable.

Understand moral and ethical responsibilities. In states where marijuana has been legalized, the liability questions are much different from those where it is not legal. There may be claim exposures where state and federal law conflict.

A claims professional has a responsibility to remain unbiased and objective when weighing facts. Where one's beliefs exist on the spectrum of opinions about marijuana from supporting medical use to feeling marijuana is a gateway drug to more behavioral and addiction issues, those personal opinions must not conflict with providing a fair and objective investigation and weighing of facts. If an adjuster's beliefs are at odds with the legal situation, such that a conflict arises, it should be disclosed and a possible recusal from the matter should be considered.

There are tough issues out there these days. Claims professionals must remain objective and comply with legal and ethical standards that apply.

Manage risks in dealing with difficult people. In the face of a difficult, mad or irate person, professionalism depends upon employing strategies to mitigate risks and diffuse or avoid escalation. This is true for businesses, as well as claims professionals. In the face of a difficult person, a number of strategies can be employed:


Listen well to the customer.


Hear their need and assess how responsively and thoroughly their need can be addressed.


When it is not possible to satisfy the customer, and the "feeling brain" struggles for dominance over for the "thinking brain," remain calm.


Do not take it personally. Recognize toxic behavior.


If behaviors escalate and calm is no longer the reality, concluding an interaction can be the safest and prudent outcome for that time.


Determining an alternative time to discuss the matter can offer a chance for emotions to diffuse.


When parties are unable to resolve complaints and conflict themselves, alternatives are reasonable to consider, including involving supervisors, and even law enforcement when necessary.

Make sound claim decisions. Through the cooperation between the insured, the local authorities, and our office, we were able to provide the insurer with solid material related to the investigation for their decision-making.

Good risk management is smart business

Through the lens of this investigation, despite a less than savory impression for this type of business establishment by some, their actions reflected those of a competent professional in their manner of interacting as well as good risk management to mitigate any exposures. With the inherent controversial nature of this business product, their responsible actions held a sense of credibility necessary to help support a fair and reasonable outcome.

Claims adjusters must work to deliver on the promises that exist in an insurance policy. By understanding the needs of a unique customer, and responsively providing the promised services, the industry can help ensure fair and just outcomes, even in the face of unique products, services and exposures. Professional interactions and good risk management are smart business.

Susan Daniels ( is the president of the National Association of Independent Insurance Adjusters (NAIIA), and is the president of Alaska-based Northern Adjusters. Mike Neroda ( is a senior property casualty adjuster at Northern Adjusters, an employee-owned business.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2018 Gale, Cengage Learning. All rights reserved.

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Date:Mar 1, 2018
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