Canadian Underwriter

Four years after marijuana legalization: What are auto claims looking like?

December 14, 2022   by Jason Contant

A man driving and smoking marijuana

Print this page Share

Marijuana legalization in Canada has shown “no statistically significant changes in the average cost per claim and claim frequency,” according to a new report from the Canadian Institute of Actuaries (CIA) and the Casualty Actuarial Society (CAS).

“The literature review shows that while marijuana impairment affects driving behaviour, the behaviour is not always riskier; for example, slower speeds and longer following distances of impaired drivers have been reported,” said the study, Assessing the Impact of Marijuana Decriminalization on Vehicle Accident Experience. “The observational studies of road accidents report mixed results, most often not detecting significant effects, particularly in the long term.”

Recreational marijuana use was legalized in Canada on Oct. 17, 2018. In the months and even years after legalization, industry players reported little if any effect on auto claims.

For the CIA/CAS study released Dec. 7, Canadian and U.S. data for 2016 to 2019 were used, including official reports on collisions of private vehicles and losses in Canada, fatal accidents, and weather factors in the United States. To isolate and therefore discount the impact of the COVID-19 pandemic, data from 2020 or later are not used. For each data source, statistical and machine learning models were chosen to account for different sources of variability.

The analysis of 10 Canadian regions accounted for the regional differences and modelled a baseline linear trend that was also observed in the pre-legalization data alone.

“The analysis showed no statistically significant change in the average cost per claim and claim frequency after marijuana legalization in Canada,” the report said. “The quarterly data available for Quebec led to similar findings….The study did not detect statistically significant persistent impacts of decriminalization.”

The Canadian data came from ‘collision of private vehicles per accident year’ in annual reports of the General Insurance Statistical Agency (which includes insurance information from most Canadian regions except public auto regimes) and the Groupement des Assureurs Automobiles in Quebec.

“Results for the claim frequency per 100 earned vehicles lead to the same conclusions as do the results for the average cost per claim,” implying no significant effects,” the report said. “Specifically, [the evidence] implies there is not enough evidence of the decriminalization effect.”


Feature image by