Even before the first wisp of legalized recreational marijuana smoke hit the air nearly five years ago, there were many questions regarding what ramifications this drug would have on the insurance industry.
Today, with more than half of the states decriminalizing or legalizing the use of marijuana for recreational or medical use, questions still abound.
Although some insurers have been cautious in offering coverage to businesses involved in the multi-billion dollar marijuana industry, others have seen this as a niche opportunity. Because businesses in the marijuana industry face unique challenges, yet have all of the traditional insurance needs, insurers are still working out coverage questions.
For example, product liability issues could come into question for a retailer selling a food product that contains marijuana. Not to mention the challenges of an all-cash business and the questions regarding exposure to armed robbery.
For non-marijuana businesses, there may be property insurance questions regarding the exposure to vandalism, fire and mold, particularly for a business moving in adjacent to where marijuana is being grown. Local businesses may face additional liability exposures from patrons who are high injuring other customers.
Legalized marijuana has also raised issues dealing with an employer's ability to maintain a safe and drug-free workplace. For example, there could be employment practices liability concerns for employers that have workplaces with heightened safety concerns and stringent enforcement of a drug-free environment because employees are operating machinery or driving vehicles.
Additionally, there are myriad questions involving workers’ compensation, and the Property Casualty Insurers Association of America (PCI), a national insurance trade association, is committed to fighting to protect employees, employers and property casualty insurers from being required to reimburse for the acquisition and use of marijuana for medical purposes.
Traffic safety concerns
One of the broadest challenges marijuana has raised is traffic safety — in particular keeping people who are impaired off the roads. This issue has raised many questions related to the crash risk of people who have marijuana and other drugs in their systems, well as testing for impairment and the development of appropriate standards for law enforcement.
The research on marijuana has often been inconclusive and sometimes contradictory, which highlights the importance of conducting more studies to explore the impact marijuana has on traffic safety.
Despite all the questions, we do know that traffic fatalities in the past two years have risen dramatically. The National Highway Traffic Safety Administration (NHTSA) reported that traffic fatalities rose 8 percent in 2015, and they recently projected that deaths during the first nine months of 2016 were up about 8 percent as compared to 2015.
Additionally, insurance industry data shows that auto accident claim frequency and severity has also been climbing steadily over the past two years. This is prompting many in the insurance community to take a new look at the key risk factors in traffic crashes.
According to NHTSA, marijuana users were about 25 percent more likely to be involved in a crash than drivers with no evidence of marijuana use. (AP Photo/Mel Evans)
It's well known that driver behavior is the most significant contributor to traffic crashes, and there's a strong consensus that distracted driving and increasing traffic congestion top the list of the biggest hazards on the roads today. However, driving under the influence of alcohol and drugs remains an important contributor to traffic accidents and fatalities.
Although the research is clear regarding the role of alcohol in crashes, much more study is needed to fully understand the complex relationship that other drugs — in particular THC, the active ingredient in marijuana — have with crash risk.
Changing definition of impaired driving
As marijuana laws are liberalized in many states and the opioid crisis ravages the country, the nature of impaired driving is changing today. The AAA Foundation for Traffic Safety found that fatal crashes involving drivers who recently used marijuana more than doubled in Washington between 2013 and 2014 — after the state legalized the drug in December of 2012.
According to NHTSA, drugs other than alcohol (legal and illegal) are involved in about 16 percent of motor vehicle crashes, and marijuana use is increasing. They also found that marijuana users were about 25 percent more likely to be involved in a crash than drivers with no evidence of marijuana use.
From 2007 to 2014, the number of nighttime weekend drivers in the United States with evidence of marijuana in their systems increased by nearly 50 percent. As legalization of marijuana expands, we are likely to see an increase in drivers who have both alcohol and marijuana in their systems — which has the potential to increase a driver's impairment.
PCI calling for increased focus on auto safety
Recent Gallup and Pew polls show nearly 60 percent of Americans favor legalizing marijuana; however, a Harris Poll conducted for PCI showed that 88 percent of Americans believe that drivers under the influence of marijuana are a hazard to others on the road and about one-third of Americans (32 percent) think driving under the influence of marijuana is contributing to the rise in fatal crashes.
With the changing public policy landscape on marijuana liberalization, PCI is calling for increased focus on auto safety. Congress and the U.S. Department of Transportation have taken important first steps by including new drug impairment studies in the “Fixing America's Surface Transportation” (FAST) Act. However, at this time it's unclear what approach the new Trump administration will take on legalized marijuana for medical or recreational use.
PCI is encouraging more study on the impact of marijuana and other drugs to develop effective impairment testing and standards before states liberalize their marijuana laws.