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Reefer Madness and Digital Insurance

On October 17, 2018, Canadians discovered legal pot.  The Globe and Mail covered the event, focusing on Ian Power, who arrived at Canopy Growth Corp.’s Tweed store in time to be the first in the the line-up to legally buy marijuana at the stroke of midnight.

“There’s a tear in my eye,” Power said. “No more back alleys.”

Good on ya, Ian!

This is the Canadian Way

There were celebrations across Canada.  And, within a few days, the government-controlled reefer had disappeared from most store shelves. There were some complaints, but most consumers took it in stride.  There will be more.  After all, this was the first legal purchase of recreational weed in 95 years.

Rough edges will get smoothed and challenges will be overcome.  Users are proud of the patience and commitment by the government. In Sidney, Nova Scotia, Ashley MacIsaac told the Canadian Press, “I don’t need to be a criminal anymore…And my new dealer is the prime minister.”

Party on, Justin.

Dopes will be Dopes

But there are some things that need attention, some of which beg for insurance professionals.  A recent survey of potential consumers, conducted by Abacus Data, found that there is a cohort preference for buzz over drink:

It seems as though millennials are choosing cannabis over alcohol. The reason? It costs less, easier to control, and has fewer perceived negative side-effects.

Obviously, toking or swallowing marijuana before driving or working is a bad, bad idea. Unfortunately, some folks just don’t get it and sanctions will be required.

As the old saying goes, “Why do you think it’s called ‘Dope’?”

Even when you get it clean, it gets tricky…

Insurers, agents, brokers, adjusters, and lawyers are already fine-tuning new coverages and protocols to address new threats.  In addition, thefts of the product and specialized equipment could be targets.

As significant, the legislation not only allows trimmed bud, but each household can grow up to four plants in their household.

Any way I twist my head, control looks to be very difficult.  Aaron Murray, partner at Beard Winter LLP, told Canadian Underwriter:

I think what we are going to see is people taking advantage of the allowable amounts and breaching the restrictions. I think that’s where you are going to see some sort of grey area with claims happening, because there are people going to be pushing the envelope of restrictions.

This is non trivial. Marijuana plants need lots of water, fertilizer, chemicals, plant lights, heat, and more.  These generate high humidity, airborne chemicals, excessive electricity/gas, and more.  In a house or apartment, there can be significant damage to buildings, interior walls / accouterments, residents, and adjacent buildings / homes.

Big challenge coming

Insurers will have to carefully define methods to identify risks and maintain activities.  Ideally, there should be surveys of the houses, but this is excessive time with people examining.  Beard Winter’s Murray says:

At the time of renewal and during the application process, certainly we would recommend new types of standardized questions. …  I don’t see an issue asking clients if they intend to grow recreational marijuana from a risk perspective

This would be onerous if on-site visits are required.  But there may be other options.  Murray adds that there could be increased costs for the insured.

Can digital toke?

Over the last few years, we have been seeing the advent of ‘smart’ homes, which check risks (leaking water, smoke, fire, etc.) and amenities (heat, air conditioning, blinds on windows, etc.).

What would happen if there were adjustments to the sensors and connections that monitor changes?  At least, could these be first line of identification?

I did a short survey of different suppliers and didn’t run across any use cases from the websites, but there is no reason to believe no one has broached the cause.

What do you think?

In this very new world, with a new, legal relaxation, can we add digital monitoring on the growing shelf?

Have you run across anything that is coming this way?  I’d appreciate your letting me know.

 

Editor’s note: InsurTechTO-18 is close to ready for prime time on 7 November 2018 in Toronto.  I hope to engage a few folks around this post and would really like to hear from you.