A look at all the ways legal marijuana is going to shake up Canada’s insurance industry

Like it or not, legal cannabis is coming to Canada. If the federal government’s newly introduced bills are approved, the changes could be rolled out as early as July 2018.

The legalized substance means major changes for the insurance industry — impacting everything from auto to health and travel.

We did a little digging and spoke with a few industry experts to get a sense of what permitted pot will mean for Canada’s insurance industry. Here’s what we found:

Auto insurance

One of the biggest fears around legal marijuana is related to impaired driving. Will it increase the number of stoned drivers on the roads? How will this crime be regulated and enforced?

While there’s still confusion around how to test for THC in drivers’ systems, and what the legal limit should be, driving under the influence of a drug — illegal or not — is a surefire way to end you up in trouble with the law, and most likely with your insurer, too.

Will regulated reefer result in a significant rise in premiums from stoned driving infractions? Or will users turn a new leaf and recognize the dangers inherent with smoking and driving? We’ll have to stay tuned to see how it unfolds.

Home insurance

This one gets a bit sticky. Under federal rules introduced in August 2016, tenants are allowed to grow a limited amount of cannabis, provided they’re medical marijuana patients.

Nevertheless, home grow-ops — regardless of legality — are viewed as high-risk in-home activities from the perspective of many insurance companies. Andrew McGrath, spokesman for the Insurance Bureau of Canada, explains:

"While regulations may allow for the legal growing of marijuana for medical purposes, it does not change the structural risk grow-ops pose to homes and condos," says McGrath.

"The operation of a grow-op, whether legal or not, is still a high-risk activity."

Will home insurance providers adapt their views and embrace Canada’s loosening marijuana laws? It remains to be seen, but a risk is a risk, so it’s highly likely they’ll remain firm on their current position.

Life insurance

With life insurance, there are signs that the underwriting process has already been impacted. Contrary to how marijuana users have been classified for years — as smokers — a number of major life insurance companies are now treating pot smokers as non-smokers, which means significantly lower premiums.

We spoke to Anne-Julie Gratton, senior consultant of media relations at Manulife, who confirmed the change: “We had already reviewed our underwriting around marijuana use, and marijuana users who do not use any nicotine products or e-cigarettes are classified as non-smokers.”

Health insurance

Much of the discussion around health insurance has centered on whether or not employee benefits should include medical marijuana. Indeed, with the joint announcement by Loblaw Companies Limited and Shoppers Drug Mart that marijuana benefits will be offered to employees, and with the recent decision by a human rights board that it should be made available in health benefits, the conversation is changing quickly.

We spoke with Joan Weir, director of health and disability policy for the Canadian Life and Health Insurance Association, to get insights into how the health insurance sector is preparing for legalization. Here’s what she had to say:

“What we see in the legislative framework for recreational marijuana is that the federal government really wants to continue with the medical cannabis route as a distinct route vs recreational marijuana, so at this point we don't’ see any impact,” she says.

“But I’ll say that we’re watching it closely, especially regarding the decisionmaking framework, taxation, and how it’s going to be distributed,” Weir adds. “Once we know answers to those questions across the provinces and territories, it might have an impact on driving more people into the medical marijuana stream, or vice versa. That’s what we’re looking at over the next 12 months as the provinces come out with their own legislation.”

Weir went on to explain that the federal government has made it clear that recreational and medical would be separate for an initial five-year period, after which the government will decide if it’s necessary to continue the distinction.

“We expect for the status quo for about five years.”

Travel insurance

Travel insurance is different than the other kinds of insurance, in that it’s usually purchased exclusively for emergencies, including trip cancellation and medical attention. Because of that, medical marijuana doesn’t fit neatly into the medical emergency structure at all. However, Weir says legal cannabis users should be careful about bringing it abroad.

“The only thing that could affect people who are medical marijuana users and who have a permit is that, of course, if you’re going to carry medical cannabis outside of Canada, you really have to be aware of the jurisdiction of where you’re going — because it might not be legal there.”