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Why life insurers are divided on marijuana use

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Despite a growing push for legalization at both the state and federal levels, the nation remains divided on marijuana use. The mixed opinions are reflected in how insurers classify pot.

As we reported in this space last year, many health insurers continue to deny coverage for use of the drug for medical reasons. The reason: Marijuana is still classified as a “Schedule 1 controlled substance” under Federal drug laws.

The lack of consensus, we now learn, extends also to life insurers. According to a new survey, a sizable minority (29 percent) of the companies with an underwriting policy in place for marijuana users classify those individuals as non-smokers.

Conducted by Munich American Reassurance Company at the Association of Home Office Underwriters (AHOU) 14th Annual Conference in Washington, D.C., held April 26-29, the survey polled 148 underwriter attendees, primarily from life insurance companies.

Of the life insurance companies represented, one in five do not have an official underwriting policy for marijuana users. For those respondents whose companies have not yet implemented a policy, 42 percent expect their respective employer to do so within 12-36 months. Also, 29 percent believe that less than 12 months will be needed to develop such a policy, whereas 26 percent peg the time frame at more than 36 months.

“Despite a legalization movement across the country, scientific studies on the long term effects of marijuana use are mixed,” says Munich Re Vice President of Underwriting and Medical Bill Moore. “As a result, the life insurance industry is left with more questions than answers, making it crucial for companies to manage risk appropriately.”

Among the nearly 150 underwriters surveyed, 36 percent believe marijuana users are non-smokers despite growing concerns around respiratory issues. Nearly half (49 percent) of the underwriters polled believe there is no difference in risk between underwriting a marijuana user who smokes the drug and a user who ingests it. Additionally, 43 percent say smoking marijuana presented more risks than ingesting it, while only 8 percent viewed ingesting marijuana as more risky.

From an underwriting perspective, 43 percent of respondents believe frequency of use is the most important factor when underwriting marijuana users, followed by an individual’s medical history (37 percent), age (14 percent), and current state of health (6 percent).

“Historically, life insurance companies and their underwriters have erred on the side of caution with respect to marijuana use, given the uncertainty surrounding the drug,” says Moore. “However, as our survey results indicate, a significant number no longer jump to classify marijuana users as smokers. Instead, they are placing a strong emphasis on frequency of use and medical history to determine rates.”