Even now that recreational cannabis for adults is legal, discussion around how it will affect our everyday lives continues. One area that is running with a wait-and-see approach to cannabis regulation is the insurance industry, specifically the auto insurance industry.
Cannabis, like alcohol, can impair driving. Penalties similar to those awarded in alcohol-related incidents will follow suit with cannabis misuse. As for insurance rates, though, insurance providers will need time to collect and analyze collision data before making any decision to raise premiums..
Now just weeks into cannabis legalization in Canada, reports on cannabis related accidents and impairments have been scarcely reported, however, looking to data from the U.S. we can draw some insight.
According to new findings from the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI), collision claim rates increased six per cent in states that had legalized the recreational use of cannabis. Colorado (which was the first to legalize in January 2014), Washington (July 2014) and Oregon (October 2015) all saw more collisions compared to states such as Idaho, Utah, Wyoming and Montana, where cannabis has not yet been legalized recreationally. This data was measured each month between January 2012 and October 2017.
A second study from IIHS looks at police-reported crashes and “the combined state findings of a six per cent increase in collision claim rates included Colorado, Oregon, Washington and added in [to the report] was Nevada,” explains Russ Rader SVP of communications at IIHS. “We don’t have enough data to analyze Nevada separately yet because legalized sales didn’t begin there until 2017.”
" data-reactid="27" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">A second study from IIHS looks at police-reported crashes and “the combined state findings of a six per cent increase in collision claim rates included Colorado, Oregon, Washington and added in [to the report] was Nevada,” explains Russ Rader SVP of communications at IIHS. “We don’t have enough data to analyze Nevada separately yet because legalized sales didn’t begin there until 2017.”
we found a 5.2 per cent increase in crash rates in Colorado, Oregon and Washington. Two sets of data but similar results.”" data-reactid="28" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">Key to note here is that one report looked at U.S. collision claim rates while the other looked at police-reported crashes, the latter typically involving more serious crashes than those reported only to insurers, notes Rader. Drawing from police reports, “we found a 5.2 per cent increase in crash rates in Colorado, Oregon and Washington. Two sets of data but similar results.”
“The new IIHS-HLDI research on marijuana and crashes indicates that legalizing marijuana for all uses is having an impact on the safety of our roads,” said David Harkey, president of IIHS and HLDI, in a statement.
While we don’t have the same data yet here at home, Hands says Canadian drivers are likely to see more roadside tests conducted by the police, and that some insurers will start to ask whether drivers smoke cannabis when they apply for insurance products.
As for immediate penalties? Just like alcohol, those found guilty of impaired driving face severe penalties, which can include steep fines, having your driver’s license revoked or in some cases, jail time.
If convicted of impaired driving “an insurer might even drop you from your policy and potentially label you as uninsurable,” says Hands. “If convicted and you still want to continue driving, you would need to purchase a high-risk policy and the pricing of these policies are generally more than double what a non high-risk driver would pay.”
Yahoo Canada Finance with the below tracking data of costs associated with insurance claims, tabulated from six provinces in 2017, prior to cannabis legalization. The total claim cost ranged from just over $500 per vehicle, as seen in Prince Edward Island, to a cost of $1,089 per vehicle in Ontario." data-reactid="33" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">Speculating on insurance rates is difficult as it is up to individual companies. Trevor Foster, manager of policy at the Insurance Bureau of Canada provided Yahoo Canada Finance with the below tracking data of costs associated with insurance claims, tabulated from six provinces in 2017, prior to cannabis legalization. The total claim cost ranged from just over $500 per vehicle, as seen in Prince Edward Island, to a cost of $1,089 per vehicle in Ontario.
Ontario Alberta New Brunswick Nova Scotia Newfoundland and Labrador Prince Edward Island
Average Total Claim Cost $11,026 $9,660 $6,565 $6,171 $6,541 $4,487
Average Total Claim Frequency per 100 Vehicles 9.87 10.62 11.48 11.74 13.37 11.85
Total Claim Cost per Vehicle $1,089 $1,025 $753 $724 $875 $532
(IBC with data from the General Insurance Statistical Agency)
" data-reactid="36" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">(IBC with data from the General Insurance Statistical Agency)
Should the data suggest that post-legalization, drivers on the road are at a higher risk of being involved in an incident, insurance providers will likely adjust their rate offerings accordingly in order to limit their financial risk, explains Hands.
Cannabis, like alcohol, can impair driving. Penalties similar to those awarded in alcohol-related incidents will follow suit with cannabis misuse. As for insurance rates, though, insurance providers will need time to collect and analyze collision data before making any decision to raise premiums..
Now just weeks into cannabis legalization in Canada, reports on cannabis related accidents and impairments have been scarcely reported, however, looking to data from the U.S. we can draw some insight.
According to new findings from the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI), collision claim rates increased six per cent in states that had legalized the recreational use of cannabis. Colorado (which was the first to legalize in January 2014), Washington (July 2014) and Oregon (October 2015) all saw more collisions compared to states such as Idaho, Utah, Wyoming and Montana, where cannabis has not yet been legalized recreationally. This data was measured each month between January 2012 and October 2017.
A second study from IIHS looks at police-reported crashes and “the combined state findings of a six per cent increase in collision claim rates included Colorado, Oregon, Washington and added in [to the report] was Nevada,” explains Russ Rader SVP of communications at IIHS. “We don’t have enough data to analyze Nevada separately yet because legalized sales didn’t begin there until 2017.”
" data-reactid="27" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">A second study from IIHS looks at police-reported crashes and “the combined state findings of a six per cent increase in collision claim rates included Colorado, Oregon, Washington and added in [to the report] was Nevada,” explains Russ Rader SVP of communications at IIHS. “We don’t have enough data to analyze Nevada separately yet because legalized sales didn’t begin there until 2017.”
we found a 5.2 per cent increase in crash rates in Colorado, Oregon and Washington. Two sets of data but similar results.”" data-reactid="28" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">Key to note here is that one report looked at U.S. collision claim rates while the other looked at police-reported crashes, the latter typically involving more serious crashes than those reported only to insurers, notes Rader. Drawing from police reports, “we found a 5.2 per cent increase in crash rates in Colorado, Oregon and Washington. Two sets of data but similar results.”
“The new IIHS-HLDI research on marijuana and crashes indicates that legalizing marijuana for all uses is having an impact on the safety of our roads,” said David Harkey, president of IIHS and HLDI, in a statement.
While we don’t have the same data yet here at home, Hands says Canadian drivers are likely to see more roadside tests conducted by the police, and that some insurers will start to ask whether drivers smoke cannabis when they apply for insurance products.
As for immediate penalties? Just like alcohol, those found guilty of impaired driving face severe penalties, which can include steep fines, having your driver’s license revoked or in some cases, jail time.
If convicted of impaired driving “an insurer might even drop you from your policy and potentially label you as uninsurable,” says Hands. “If convicted and you still want to continue driving, you would need to purchase a high-risk policy and the pricing of these policies are generally more than double what a non high-risk driver would pay.”
Yahoo Canada Finance with the below tracking data of costs associated with insurance claims, tabulated from six provinces in 2017, prior to cannabis legalization. The total claim cost ranged from just over $500 per vehicle, as seen in Prince Edward Island, to a cost of $1,089 per vehicle in Ontario." data-reactid="33" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">Speculating on insurance rates is difficult as it is up to individual companies. Trevor Foster, manager of policy at the Insurance Bureau of Canada provided Yahoo Canada Finance with the below tracking data of costs associated with insurance claims, tabulated from six provinces in 2017, prior to cannabis legalization. The total claim cost ranged from just over $500 per vehicle, as seen in Prince Edward Island, to a cost of $1,089 per vehicle in Ontario.
Ontario Alberta New Brunswick Nova Scotia Newfoundland and Labrador Prince Edward Island
Average Total Claim Cost $11,026 $9,660 $6,565 $6,171 $6,541 $4,487
Average Total Claim Frequency per 100 Vehicles 9.87 10.62 11.48 11.74 13.37 11.85
Total Claim Cost per Vehicle $1,089 $1,025 $753 $724 $875 $532
(IBC with data from the General Insurance Statistical Agency)
" data-reactid="36" style="margin-bottom: 1em; color: rgb(38, 40, 42); font-family: "Helvetica Neue", Helvetica, Arial, sans-serif; font-size: 15px;">(IBC with data from the General Insurance Statistical Agency)
Should the data suggest that post-legalization, drivers on the road are at a higher risk of being involved in an incident, insurance providers will likely adjust their rate offerings accordingly in order to limit their financial risk, explains Hands.
