Pot legalization’s implications on life and health insurance

Insurers will have to deal with new risk and coverage issues as use of the substance becomes more prevalent

Pot legalization’s implications on life and health insurance

With legalization expected to open the floodgates to more widespread use of cannabis across Canada, those involved in the underwriting and administration of life and health insurance policies will have to recalibrate their approach to consider emerging risks.

“Cannabis use during working hours can increase the risk of accidents and of absenteeism,” wrote Mylany David and Richard Provost of Lanlois Lawyers in The Lawyer’s Daily. While disability claims resulting from such use represent the greatest risks, Quebec employers can mitigate the risk through Bill 157, which lets them regulate — and even prohibit — all forms of cannabis use by employees in the workplace.

While large companies such as Sun Life have included reimbursement for medical cannabis expenses in employee benefit plans, David and Provost said insurers must ensure reimbursement of therapeutic cannabis is selective, with each group insurance plan providing strict qualification requirements aligned with regulations on access to cannabis for medical purposes.

“As an illustration, the Sun Life Group Insurance Plan provides that the employee must qualify for coverage according to Sun Life’s predefined criteria by completing an approval form,” they wrote, adding that the employee must be registered with Health Canada under the Cannabis Medical Access Regulations.

“If the amount of life insurance premiums should not be affected by the legalization of recreational cannabis, significant changes will have to be made in the underwriting process,” they said. Since cannabis use is no longer regarded as “smoking,” cannabis smokers must be reclassified as “non-smokers.”

Insurers can also introduce a new question about the frequency of cannabis use to adequately assess risks when underwriting policies. Related to this, the duo said, insurers must define what counts as occasional cannabis use and what rates will be applied in such cases.

The detection of cannabis in determining the causes of an accident can also affect life insurance compensation claims. While tests can detect THC in a person’s body for several days after use, determining whether someone was actually under the influence of cannabis during a fatal accident is still impossible. David and Provost said the issue has been raised in Colorado, where an insurer denied half of the compensation to a widow after toxicological reports found there were high levels of THC in her husband’s system during his fatal workplace accident.

“[T]he new role of insurance advisers and brokers must not be neglected,” the duo wrote. “They will have the duty to adequately inform their clients about cannabis use and pricing and ensure that they comply with the legislation in force in Canada and in the province where they reside.”