Insurers set to handle Marijuana legalization with open arms
As Canadians start to countdown the days leading to the legalization of recreational marijuana, so will Canadian Insurance Companies, and it’s anyone’s guess as to how many Canadians have been hiding in the closet.
Statistics Canada recently announced that nationally, about 4.2 million Canadians aged 15 years and older reported some use of cannabis products for medical or non-medical use in the past three months. More than half (56%) of the users indicated that they used some form of cannabis “daily” or “weekly. That’s big business for the Insurance Companies.
When Canadians wake up on October 17, the day legalization takes effect, many Canadian Insurance Companies will already have underwriting guidelines in place, for what could be a dramatic shift towards mainstream usage. “What used to be taboo, will soon become the norm”, says Martin Bailey, CEO of Karma Insurance. Insurance Companies previously established rates for clients that used marijuana, in the same category as someone who uses tobacco. That meant Canadians using marijuana but not tobacco still paid increased premiums, costing you double.
Although Insurance Companies use many factors to determine premiums, such as age, sex, family health history and your lifestyle, smoking cigarettes is a sure-fire way of doubling your premium. The same used to hold true for someone using marijuana recreationally. But now, underwriters are taking a second look and have begun to ask more questions.
Let’s say you’re 30 or 40 years old, married, in a stable career and you don’t use any tobacco products or abuse any substances. But you and your friends like to socialize and share the occasional joint Friday night. Generally speaking, you’re going to receive non-smoker rates. Alternatively, someone who doesn’t use any tobacco but may have past substance abuse, lack of job stability or perhaps uses marijuana daily, could see an increase in their premiums. “Those two client profiles are very different”, says Martin, “and insurers have begun to recognize this. What you’re essentially seeing is clients not being penalized for having an occasional joint and that’s a good thing for Canadians.”
Then there’s the issue of how you’re using marijuana. People are starting to shy away from smoking and many Canadians now find themselves trying alternate methods including oil, pills, vaping or enjoying edibles. The underwriters are interested in not only if you are using marijuana, but the frequency, the quantity and how you’re consuming it. They have also begun to realize that with legalization around the corner, no longer will you be buying from an unlicensed dealer, rather a federally regulated facility with strict growing guidelines, systems and procedures in place. All of this has helped the Insurance Companies embrace change, rather than ignore it.
So, should you still worry about disclosing marijuana usage to an Insurance Company? It’s always best for clients to give full disclosure when filling out an application for insurance and not be afraid of releasing that information. Most Life, Critical Illness, and Disability Insurance policies can be rescinded within the first 2 years, while fraud is indefinite, meaning a claim can be denied altogether if the intent was to defraud the Insurance Company.
As policy in Canada is changing to become the first G7 nation to legalize recreational marijuana usage, so too will the advice you receive from your insurance broker. Our advisors at Karma Insurance can help you navigate the complexities of insurance by understanding your needs and working with you to determine the best possible solutions to protect you and your family.
Contact us today.