General liability policies could come from marijuana legalization

Published: September 27, 2017

Updated: July 24, 2018

Author: Luke Jones



Insurance companies must keep speed with marijuana risks to know whether cannabis-related loss history could result in defence and indemnification obligations and liability policies for employers. The topic was discussed during a Tuesday session at the RIMS Canada Conference, which was held in downtown Toronto.

“An employee who is under the influence of marijuana while at work could injure others, including customers, third parties or employees,” Leszek Bialy, vice president and head of alternative risk transfer for Zurich Canada.

Baily was speaking during the conference session, Joint Accountability: A Risk and Insurance Focused Marijuana Primer.

“An employer’s general liability policy would typically provide defence and indemnification to the employer for alleged injuries to an injured party on or off of the premises,” Bialy said.

The federal government will legalize marijuana for recreational use before July 1, 2018. Cannabis is already legal for medicinal purposes. Ahead of the legalization, authorities and insurers are debating how to be manage risks and implications.

Baily asked attendees if insurers currently redrafting underwriting applications in light of the evolving marijuana risk?

“At this time, I’m going to say no. However, the risk is deemed to be an evolving risk and insurers are watching. If there’s a loss history suggesting impairment, don’t be surprised if an insurer asks more questions and looks to confirm guidelines and policies to manage risk,” he highlighted.

Another speaker was Alexis Moulton, a partner with McLennan Ross LLP, who suggested a lack of data will cause brokers problems and will make pricing difficult.

“There’s simply not enough information out here right now. It makes pricing hard; it’s going to take a big effort on the part of the insurers, the brokers, the underwriters, the clients, the insured, etc. to understand this risk,” Moulton said.

“Underwriters need to consider the what ifs, but you can’t price it out of the range of what the growers can afford,” she emphasized.