Frontier Risk Group (FRG) announced its launch on October 19, formally bringing together a team of seasoned executives and experts from the insurance and cannabis industries to build the first tech-enabled insurance ecosystem to better service cannabis risk.
Former CEO of Parallel, Inc., and cannabis industry pioneer James Whitcomb, teamed up with IA Capital Group, the leading insurtech-focused investment firm to form the new company.
Photo: James Whitcomb
FRG projects to become the leading commercial insurer in a ~$30 billion industry that could reach $150+ billion if cannabis is federally legalized.
Market Insurance Solutions For The Cannabis Space
Through its advanced technology platform that feeds risk data to all stakeholders, Frontier's mission is to bring to market insurance solutions backed by tech and data that improve access, pricing and risk capacity across the cannabis insurance ecosystem. The company also expects growth across all parts of the value chain (growers, wholesalers, product companies, retailers and other ancillary services). In this context, FRG will respond to a current “shortage of insurance solutions” amid regulatory uncertainty that has forced traditional (re)insurers "to the sidelines.”
Extensible to emerging sectors in the wellness industry including psychotherapeutics that will face a similar lack of insurance solutions, the company envisions a Total Addressable Market (Including Adjacent Opportunities) of $10B+. Benzinga had the opportunity to chat with CEO James Whitcomb and Head of Insurance Jeff Richardson.
“This is a unique moment in time to finally solve the cannabis insurance issue. Operators of all kinds are legally required to have multiple lines of coverage as the market has bloomed. This has coincided with the traditional insurance industry’s adaptation of proprietary underwriting technology and real-time cannabis data to capture a glaring asymmetry in risk coverage. We feel our team of experts, who have lived every part of the cannabis and insurance value chains, is best positioned to guide clients to better risk management,” Whitcomb said.
“We formed Frontier Risk to build inclusive, modernizing approaches and new opportunities for cannabis to be a true mechanism for social equity in the sector, which I outlined in my open letter to top cannabis executives earlier this year. Our company also aims to resolve many of the issues signaled in this cannabis insurance brief, which I co-authored with leading global actuarial consulting firm Milliman. By improving access, pricing, and risk capacity, Frontier Risk will bring the first technology-enabled insurance ecosystem to market, helping to ensure the cannabis sector has the longevity it deserves and leveling the playing field for businesses, regardless of their size,” Whitcomb added.
“As someone who has helped grow specialty programs for decades, it’s fair to say that this supply-demand imbalance is very unique in insurance. Our job at Frontier is to use data and our expertise so that clients aren’t on the receiving end of that imbalance,” Richardson said.
The Opportunity
FRG understands insurers are staying on the sidelines because of perceived regulatory/reputational risk. Also, capacity constraints are causing “massive market dislocation and lack of well-priced coverage options,” while Federal illegality has severely constrained availability of risk capital for commercial insurance. As a response to this fragmented and complex landscape, FRG offers a modern technology to originate and price quality risk.
As the first dedicated insurtech in the cannabis insurance space with seasoned cannabis risk experts, FRG will pursue embedded partnerships, efficient distribution, and superior risk selection using modern cloud-native core technology. Likewise, its digital application process enables an omnichannel acquisition strategy.
Industry Veterans Join The Platform
In addition to announcing the appointment of James Whitcomb as its CEO, Frontier Risk announced additional industry veterans have joined its platform. “While the Biden Administration hints at further regulatory progress, the reality is the cannabis industry is stuck in the past on several fronts, perhaps most of all in insurance when it comes to commercial issues,” Whitcomb said. “Today, whether you’re an established large operator or a brand new single dispensary owner, you’re required by law to hold multiple lines of coverage, and many can’t obtain the coverage they need at all, much less at more traditional market prices.”
Jeff Samuels, brings a breadth of experience from cannabis insurance and insurtech sectors, most recently at Embroker, will serve as the Company’s head of distribution, responsible for Frontier’s multi-channel, tech-enabled brokerage strategy including direct, intermediated, and embedded approaches.
Jeff Richardson, who was responsible for multiple specialties at OneBeacon/Intact Specialty has joined Frontier Risk as head of insurance, overseeing product design, pricing, underwriting and capacity for the firm’s proprietary programs and eventual reinsurance unit.
To bolster the insurance team, Frontier Risk also appointed Courtney Stough as Chief Legal Counsel and Chief Operating Officer and Peter Berg as Chief Development Officer. Both executives worked with Whitcomb at Parallel and previously worked for AmLaw's Top 100 law firms. Together, this team of executives will help lead the company and its partnerships to develop market-enhanced insurance solutions, services and products.
“Whether you’re an established large operator or new dispensary owner, you need an insurance team that understands the intricacies of every part of the cannabis value chain," Samuels said. "Frontier Risk’s advanced technology platform feeds risk data to all stakeholders – a key differentiator that enables us to quickly match insurance solutions to clients' needs and enhance our growth and underwriting performance. Today, these solutions don’t exist at scale, but we’re here to change that so the industry can better protect all stakeholders.”
Photo by Towfiqu barbhuiya on Unsplash.
