“It’s been an interesting time because these cannabis companies are becoming really innovative, and they’re coming up with these unique products, all of which fall within the strict guidelines that Health Canada puts in place,” said Allison Sinha, senior underwriter in the property and casualty department at Burns & Wilcox Canada.
Because many people prefer to consume cannabis in the form of edibles and beverages, instead of smoking or vaping it, this legalization step made the cannabis sector more accessible overall, both within the medicinal and recreational marketplace. That being said, there are still a lot of concerns that accompany this – and any – emerging class of business. For one, Sinha highlighted the worries over children consuming cannabis products.
“Recently, we’ve seen a couple of cases where children have gotten sick from taking products from their parents,” she said. “These items were produced on the black market, and not within the Health Canada regulations and guidelines, but it just goes to show that we need to be careful when producing these products so that they are not attractive to children, and that parents are storing them safely.”
Speaking of alternatives to the smoking and vaping of cannabis, those two methods of consumption have been in the spotlight recently due to adverse health effects – especially in young adults that are vaping significant amounts of tobacco and cannabis. Sinha pointed to ‘popcorn lung’ as one notable area of concern. As a result, she continued, “Undoubtedly, we will begin to see some more regulations put into place by Health Canada to hopefully help support the public and further educate them about the dangers of vaping and smoking in general.”
In turn, cannabis producers are going to start to see those regulations being passed down to them.
Moreover, the cannabis sector in several provinces, like Ontario, is expanding rapidly because governments are allocating more licences to provincial retailers.
“At the beginning of 2018, the province of Ontario only issued a certain number of licences, and this was a big point of contention for a lot of consumers because with cannabis becoming legalized, the whole point was accessibility and moving away from the black market,” said Sinha. “When we see more and more cannabis dispensaries popping up, it allows for the public to access these products, and access them safely. It also creates a lot of jobs and I think the Canadian economy has seen good growth, in terms of both high- and low-level jobs, because of the cannabis industry.”
As for how the insurance industry is responding to these emerging exposures, many insurers are willing to pick up the coverages for edibles and beverages – but that doesn’t mean it’s all smooth sailing for cannabis insureds.
“We are seeing some more exclusions being put on policies, in particular, for those that are offering vape products, because of the class actions and the claims that we have seen with tobacco vaping products,” said Sinha.
Meanwhile, on the edibles side, the safe consumption of these products is top of mind for the insurance industry, as well as insureds. It’s important for the cannabis industry to help educate consumers, not only to protect themselves, but to protect the end consumer as well. Notably, if their policy has certain exclusions or higher deductibles because of edibles, they’re going to be paying out more at the end of the day, should a consumer experience an adverse side effect, explained Sinha.
“In regards to the general expansion of cannabis companies, we’re seeing some capacity shrinking within the market, but also growing at the same time,” she noted. “There are certain classes that we are seeing carriers pull away from, such as personal growers, and they’re putting their capacity into classes that are better performing, such as licensed producers or retailers.”
Additionally, while it’s a move in the right direction to see carriers step up to the plate and provide more capacity, some reinsurers are pulling out, added Sinha, “which can also have a domino effect, as the coverages that they’re offering might be slightly different.”