Changing Laws Could Make Marijuana Users Attractive To Insurers: Panel

TAMPA--There are 15 different proposals for federal reform of how marijuana is treated by the law. Legalizing the drug at the federal level could have a profound impact on the insurance industry, a panel agreed Monday.

The discussion -- titled "Cannabis and the Insurance Industry" -- helped kick off the initial sessions of the 2022 Life Insurance Conference, sponsored by LIMRA, LOMA, Society of Actuaries and the American Council of Life Insurers.

Marijuana is a Schedule I substance under the Controlled Substances Act, even though 37 states passed statutes to legalize the drug in some fashion. The federal government generally adopted a no-enforcement policy under the Obama administration that continues today.

However, because marijuana remains illegal under federal law, there remains the opportunity for marijuana traffickers to launder money via a large life insurance policy, noted Mike Hesse, vice president and chief underwriter at RGA.

Perhaps the best opportunity to pass a bill is the Safe Banking Act, explained Jessica Rodgers, associate with Eversheds Sutherland. The bill clarifies federal law to allow banks and credit unions to provide financial services to marijuana businesses following the laws of the states in which they operate.

"It doesn't really do anything other than provide a safe harbor to financial institutions," Rodgers said. "This bill does not do enough in some some people's minds. [Marijuana supporters] want it to go further. And as a result of that, it has has been introduced and failed several times in a row."

Up In Smoke

A recent Forbes survey found that 56% of people say they would lie about their marijuana use to avoid higher life insurance quotes. That could create an empty high for policyholders, who can be dropped by insurers for lying on their applications.

If you use marijuana eight days or less per month you may be able to still qualify for good rates, Forbes reported. Using pot nine to 16 days per month could put you into a more expensive rate class. And marijuana use more than 16 days a month could result in a denial.

Insurers certainly have some concerns about doing business with admitted marijuana users, Hesse conceded. But nothing too unreasonable, he added.

"We're really just looking at how the cannabis use might impact on the person's ability to function," he said. "It's probably, in some respects, going to be treated more lightly than alcohol, for example."

The panel, moderated by Daniel Zamarripa, chief medical officer for American International Group, agreed on the medicinal efficacy of marijuana in treating a host of painful and stubborn afflictions. That education extends to the life insurance industry, Hesse insisted.

"Insurance companies in general have become much more friendly to cannabis," he said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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