Hugo du Preez, Manager: Technical Operations at PPS Short-Term Insurance

Since many countries, South Africa included, decriminalised, through the Cannabis for Private Purposes Bill, the private use and growing of cannabis, its recreational use is increasing. Cannabis can be consumed in many ways -smoking, vaping, ingesting or through the skin. This means the number of products that can be made with it are bountiful. From lotions, chocolates, beverages, bath salts, lotions, ‘weed’ tampons to dog treats with full legislation, many expect recreational use to grow phenomenally.

But how will this affect the South African insurance industry? Will this trend increase even further once the law comes into effect?  Before we answer those questions let's look at some of the facts surrounding marijuana.

Tetrahydrocannabinol (THC) and cannabidiol (CBD) are the two primary cannabinoids that occur naturally in the cannabis plant. Both substances interact with the cannabinoid receptors found in the human body and brain, but they differ dramatically in their effects. CBD is non-psychoactive which means it will not get the user “high” whereas THC is the exact opposite. The effects of THC include relaxation, altered senses of sight, smell and hearing, fatigue, hunger and reduced aggression.   

Evidence is still inconclusive regarding the health risks and potential benefits of smoking marijuana. On one hand, no deaths have been reported due to acute marijuana poisoning, and no studies have clearly documented increased mortality from the use of the drug. On the other hand, there's no consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognised disorder. Further studies will be necessary to reach a definitive conclusion on the long-term health and mortality impacts of marijuana consumption.  

The insurance industry must carefully consider the underwriting implications of more widespread marijuana use. The key underwriting considerations will include the frequency, purpose, and admission of use, as well as the type of marijuana used, the applicant’s age, history of accidents, risky behaviour, and other substance abuse. 

Also, while there is some controversy about the mortality impact of the occasional marijuana smoker, the bigger issue to navigate is the different forms of marijuana available and measuring the quantity of the various subtypes. 

Given the many different forms of marijuana (vaporisers, oils and ingestibles, etc.), an underwriter needs to be able to quantify not only the dosage, but the strength of the substance involved. Although some companies are considering offering non-smoker rates to the occasional marijuana user who does not smoke or combine tobacco or nicotine products, this remains a challenge. The competitive marketplace has driven a number of these changes; however, their long-term impact is still not known. Even with studies supporting these underwriting changes, there may be trade-offs including possible price increases, unexpected mortality results and a fundamental shift in the type of applicant insurance carriers target.

What is PPS’s position on this issue from a short-term insurance perspective? 

On the short-term insurance side, it is important that users consider the implications of driving after ingestion as this could contribute to slow responses to critical situations on the road and possible crashes. The use of cannabis, just like any other drug, can be investigated and considered when validating a vehicle claim.  

This is because it is unlawful to be behind the wheel of a car when if you are under the influence of intoxicating liquor or drugs or your blood or breath alcohol concentration exceeds the legal limit. It is vital to understand that it does not necessarily mean you should be tested to determine whether you are over the legal limit.  

There are various ways of getting information like statements of reliable witnesses that can prove that you were under the influence of intoxicating liquor or drugs that can be used. The same applies even if the cannabis was prescribed by a medical practitioner. It might not be illegal to use it but it is illegal to operate a vehicle when you have used it.

Lastly, if you have been found guilty of certain charges such as fraud, being in possession of cannabis beyond the legal limit or driving under the influence, rather disclose this information to your short-term insurance company or your broker.