December 14, 2016 by Michael McKiernan
More than a year on from the election of Justin Trudeau’s Liberal government, the smoke has yet to clear on his promise to legalize and regulate the sale of marijuana.
And the view is just as hazy for the country’s drivers as they try to figure out what effect legalization will have on their auto insurance rates. But they could be forgiven for fearing the worst, considering the prevailing upward trend in auto insurance rates across Canada.
The government-run Insurance Corporation of British Columbia applied for a fifth consecutive annual rise in rates this August, although the 4.9 per cent boost it requested would equal the smallest individual hike since 2011. In Ontario, home to some of the highest average premiums in the country, a two-year effort to reduce rates by 15 per cent from 2013 levels fell well short despite significant cuts to accident benefits coverage. By the August 2015 deadline, rates were down by around seven per cent from 2013, but approved rates have since edged up in each of the second and third quarters of 2016.
Brody Stonehouse, general manager of AC&D Insurance, a brokerage in North Vancouver, has developed a niche in obtaining equipment and premises liability insurance for legally licensed growers in the marijuana business, as well as dispensaries, who operate in a much greyer legal environment. He says they often face steep prices, but puts that mainly down to a lack of competition and the tenuous legality of some operations.
Many of his clients prefer to take their chances and turn down expensive policies, according to Stonehouse, but he’s confident that drivers, who have no choice in the matter, will fare better. Stonehouse remains skeptical that legalized marijuana will have much impact on the auto insurance market, particularly in urban areas such as Toronto and Vancouver where it is readily available, despite criminal laws surrounding its use and sale.
“I don’t think we’re going to see a huge jump in people using the drug, or driving around intoxicated by it. Anyone who wants to can already do that,” he says.
Until the federal government gets its legal marijuana regime up and running, and accident data begins coming in, Julia Marshall, the president of the Insurance Brokers Association of Alberta, says drivers should be insulated from premium hikes as a direct result of the policy.
“I don’t see any justification for raising rates just in case more people are going to start driving while impaired by marijuana,” she says.
We want to make sure people know that [marijuana] can affect your driving, and…can put your own life and other road users’ lives in danger.
However, the omens don’t look good beyond that to John Bordignon, a spokesperson for State Farm Canada. A survey by his firm found more than 10 per cent of respondents had driven while under the influence of marijuana, and that 44 per cent of those people believed it would have no effect on their driving ability.
With availability of the drug set to increase, Bordignon says State Farm wants to raise awareness about the dangers of impaired driving and encourage people to take road safety more seriously.
“We want to make sure people know that this is a drug that can affect your driving, and that how you act can put your own life and other road users’ lives in danger,” he says.
Tim Brown, a researcher with the National Advanced Driving Simulator in Iowa, says complacency about driving under the influence of tetrahydrocannabinol (THC), the active ingredient in marijuana, may have its roots in users’ awareness of their own intoxication while smoking up.
A study by his team showed that while drivers who consumed alcohol were more likely to speed, participants who smoked joints tended to travel at a speed well below the limit. However, Brown says that doesn’t make them safe drivers, comparing a stoned driver trundling along the road to a texting driver who slows to a crawl to compensate for their distraction.
The study concluded that drivers who consumed both alcohol and cannabis performed poorer than those who took either substance alone, but Brown says there are few clear answers on marijuana’s impact on driving ability at this stage.
“We don’t have a solid idea of all the impacts. I’d like to say it’s not a concern, but any time a substance crosses the blood-brain barrier, that gives us pause,” he says.
Brown says his task is made even more difficult by the way THC breaks down in the body. The drug absorbs very quickly, he explains, but metabolites left behind linger for hours after, meaning there is no real correlation between the level detected and the actual level of impairment on the driver at the time of testing.
“With alcohol, the level in the breath is a pretty effective way of measuring how much the person has taken in and how impaired they are,” Brown says. “For THC, the same is not true. There is no good way to measure the amount in your brain, or the effect it has.”
Jeff Brubacher, an emergency room doctor in Vancouver, has done his own research on Canadian data about the role of cannabis in auto accidents. Blood tests carried out on injured victims at seven trauma centres around B.C. found 7.3 per cent had levels of THC that indicated recent use of the drug. By comparison, alcohol was detected in 17.8 per cent of victims.
Brubacher wants to continue collecting data after legalization. But when it comes to assessing its effect on the total number of car accidents, he says, the bottom line is “we don’t really know what is going to happen.
“A lot will depend on how legalization is rolled out, and how the police enforce it,” Brubacher adds.
Luckily for Canada, considering the multitude of unknowns surrounding the effect of legal marijuana on auto accidents and insurance levels, the U.S. states of Washington and Colorado volunteered as effective guinea pigs back in 2012 by voting to legalize the drug.
Last year, a report by the AAA Foundation for Traffic Safety caused a stir by showing that the number of fatal crashes involving drivers with marijuana in their system doubled between 2013, when around eight per cent of drivers in fatal crashes had used the drug, and 2014, when the number jumped to around 17 per cent. However, the level of impairment by marijuana could not be measured, and many drivers had also used alcohol and other drugs in combination.
In Colorado, Carole Walker, the executive director of the Rocky Mountain Insurance Information Association, says 2016 was a banner year for auto insurance premium rises, with rates going up on average by about 15 per cent.
Although the state recorded its deadliest year on the road in almost a decade in 2015, Walker says a local population spike was likely the biggest factor there, thanks to an influx of new drivers. Insurance claims costs have also hit all-time highs, but she says hail damage and legal quirks have significantly impacted that realm, citing legal marijuana as just one among a series of factors that have created a “perfect storm” for car insurances rates.
…legal marijuana [is] just one among a series of factors that have created a “perfect storm” for car insurance rates.”
“We can’t draw a direct line to marijuana, but we are concerned that it could be a contributing factor,” Walker says.
At the Insurance Bureau of Canada, spokesperson Andrew McGrath says they have similar problems isolating the causes of high insurance rates. Fraud, accident rates, repair costs and injury claims, among others, all play their part.
“It’s impossible to tell if one factor is going to move the needle,” McGrath says.
On an individual basis, McGrath and others say alcohol will likely provide a template for insurers’ treatment of marijuana use, meaning drivers who land a conviction for drug-impaired driving will find their premium going through the roof.
Getting those convictions could prove problematic though. State Farm’s survey found a majority of respondents doubtful about the legal system’s ability to handle drug-impairment charges. While detection methods are in the works for THC, including breathalysers and saliva tests, Toronto criminal lawyer Stacey Nichols says it’s still “much easier to poke holes in the prosecution case” for drug-impaired driving charges than drink-impaired charges backed up by the longstanding and reliable testing system for alcohol.
Other than DUIs, Marshall can’t see questions about marijuana use going into underwriting calculations though.
“We don’t ask if people use alcohol, so I can’t see people being asked about marijuana. But then anything is possible,” she says. “We’ll just have to wait and see.”
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the December 2016 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.