If your clients use marijuana, either for medical purposes or recreationally, insurers have traditionally rated them as smokers—and charged smokers’ rates, which are often 40% to 50% higher. But that may soon change.

Recently, a host of carriers—among them Empire Life, Great West Life and Sun Life—have decided not to penalize clients who occasionally use pot or hashish (see “Where do insurers stand on pot use?”). Other carriers have followed suit or are in the process of updating their positions.

The change, says Joan Weir, director of Health and Dental Policy at CLHIA in Toronto, was thanks largely to a well-organized, public campaign by medical marijuana proponents. The campaign, she says, brought forth a convincing amount of scientific evidence as to pot’s benefits and its relative safety compared to tobacco.

And then there are market forces: in 2015, a Munich Re survey found that nearly one third of major U.S. carriers considered marijuana users to be non-smokers. It’s not surprising that that trend has gravitated northward, given the federal government’s recent legalization of medical marijuana and its subsequent move to decriminalize cannabis in 2017.

Individual carriers, says Weir, will have reviewed the science, as well as their books of business to determine whether pot use has a similar health impact to tobacco use. Clearly, they’re concluding that it does not.

This opens the door for recreational pot users to have their policies reviewed. Clients who use marijuana either medically or recreationally, and who were previously assigned smokers’ rates, now have the opportunity to be considered for non-smoker rates.

But the changes don’t give marijuana users free rein. BMO, for example, is extending non-smoker rates to “occasional” weed users; the company has defined “occasional use” as no more than two joints a week. (Those who use marijuana for medical purposes will also be considered for non-smoker rates.)

Also, clients who want to benefit from the lower rates should be sure to exclude tobacco from those joints: all carriers stipulate that users of marijuana will be considered non-smokers only if they eschew e-cigarettes, tobacco and nicotine.

Talking to prospects and clients

The discovery process shouldn’t be radically different, says Sarah Brown, a broker at Al G. Brown & Associates in Toronto.

“Whenever we fill out an application for insurance, we’ve always had to ask clients whether they have used marijuana and other recreational or illegal substances. We still have to ask, and they will still have to disclose,” Brown says.

Where do insurers stand on pot use?

Industrial Alliance Clients who use marijuana may qualify for non-smoker rates if they do not use tobacco products or products containing nicotine. Based on the quantity of marijuana consumed, the client may be considered for the regular non-smoker rate or the non-smoker rate with extra premium.
Manulife Marijuana users who do not use any nicotine products or e-cigarettes will be classified as non-smokers. (Updated October 24, 2016.)
Empire Life Users of marijuana and hashish for medicinal or recreational purposes may be considered for non-smoker rates if there has been no use of e-cigarettes, tobacco or nicotine in any form in the last 12 months.
Sun Life Marijuana users are now assessed at non-smoker rates unless they also use tobacco.
Great-West Life, London Life & Canada Life Clients who use marijuana will no longer be considered smokers, unless they use tobacco, e-cigarettes or nicotine products.
ivari Clients who use marijuana will no longer be charged smoker rates, unless they also use any form of tobacco. Clients will be assessed according to the frequency of marijuana use.
BMO Insurance Occasional marijuana smokers will be considered for non-smoker rates. Occasional marijuana smoking is defined as up to two marijuana cigarettes per week for recreational purposes only. Medical marijuana users will be considered for non-smoker rates and underwritten based on their individual risk parameters.

Most providers, including Wawanesa Insurance and Empire Life, are in the process of updating forms to reflect the change. They will still require new applicants who use marijuana to disclose this fact and provide details as to how much and how often they use, as well as in what forms. Whether a client smokes a (tobacco-free) joint, vapes or ingests pot doesn’t make a difference, says Weir.

But the application process is more than just checking the box “non-smoker,” says Brown, who may review some clients’ files to see who could be eligible for the new classification. Applicants will have to fill out all standard health and lifestyle questions when they apply for the change. And an insurance carrier’s decision will take into account all information on the form.

Clients who have no health changes shouldn’t have much to worry about. But if, for example, a client has gained a significant amount of weight, has been diagnosed with a new medical condition or now drinks more heavily than she did in the past, she may not receive a break on her premiums.

Insurance companies, however, cannot increase the premiums they charge for an existing policy based on this kind of new information.

What about clients who hesitate to disclose drug use? Not doing so is a bad idea, says Ken MacCoy, CHS, of RitePartner Financial Services in Chilliwack, B.C. “If you don’t disclose that you’re using, and then THC or another substance shows up in your blood or urine samples, the policy will be voided for nondisclosure or fraud.”

Insurers can also contest or rescind a policy, or deny a claim altogether, if an applicant fails to disclose or misrepresent information in her original insurance application, or a reinstatement or change application. Brown also points to the industry’s two-year contestability period, which allows insurers to rescind a policy within the first two years without having to prove fraud. In this case, says Brown, a carrier only needs to have evidence of “material misrepresentation”—that is, false or undisclosed information.

So, the onus on clients is to fully disclose drug use. MacCoy counsels his clients on the risks of nondisclosure and fraud, and explains the two-year contestability provision at several stages during the application process.

“When they’re signing, I tell them, ‘Your signature on the application verifies that all information and facts provided on the application are truthful, to the best of your knowledge.’ And when I deliver the policy, I always have them sign my own policy-delivery form and remind them of the risks of nondisclosure.”

For applicants leery of admitting they use pot—or stronger drugs—MacCoy points out that insurance applications are confidential and cannot be shared with law enforcement. That said, he notes an applicant who discloses cocaine or heroin use is extremely unlikely to be approved for insurance. If they are approved, they’ll face much higher premiums.

Susan Goldberg is a financial journalist based in Thunder Bay, Ont.