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Legalisation of Cannabis 05/03/2019 5-7 FEBRUARY 2017 1 LEGALISATION OF CANNABIS PIETER VAN ZYL Munich Re 2 1 05/03/2019 3 MARIJUANA / CANNABIS Marijuana Grass Cannabis Hash Ganja Pot Dagga Weed At least 1,200 slang terms Marijuana – Spanish term – moving away due to illegal connection in USA - Cannabis 4 2 05/03/2019 AGENDA Terminology and role of SA Courts Background into the September 2018 ConCourt ruling Global overview of legalization and insurance practices South African overview and insurance 5 LEGALISATION vs DECRIMINALISATION Legalisation – making particular action legal Decriminalisation – criminal penalties no longer in effect 6 3 05/03/2019 S.A. COURTS High Courts may find legislation unconstitutional Constitutional Court – only court that can confirm unconstitutional 7 18 September 2018 Terminology and role of SA Courts Background into the September 2018 ConCourt ruling Global overview of legalization and insurance practices South African overview and insurance 8 4 05/03/2019 CANNABIS CASES Mario Oriani-Ambrosini ￫ Constitutional lawyer and member of IFP ￫ Stage IV cancer and received treatment (cannabis) in Italy ￫ Introduced a bill to Parliament for decriminalization of cannabis for medical use ￫ Bill was not accepted – died… “Dagga Couple” – Kathleen Clarke and Julian Stobbs ￫ Stobbs trial in High Court, Pretoria ￫ Arguing case since 2013 to strike down all laws that ban sale, growth and use of dagga ￫ Trial still ongoing (adjourned and to resume in 2018) ￫ ConCourt agreed for them to join application as they have direct and substantial interest in the proceedings 9 CANNABIS CASES Gareth Prince’s story… Prince v President Cape Law Society and Others - 2001 ￫ Law Society refused to register contract due to previous convictions for possession of cannabis ￫ Rastafarian – expressed intention to continue using cannabis ￫ Challenged constitutionality as it infringed on rights to freedom of religion, dignity, pursue profession of choice and not be subject to unfair discrimination ￫ High Court – prohibition does limit constitutional right but limitation justifiable under section 36 ￫ Referred to Supreme Court of Appeal (SCA) who dismissed the constitutional challenge ￫ Referred to ConCourt in 2002 who also dismissed the appeal 10 5 05/03/2019 ConCourt RULING March 2017 – Western Cape High Court ￫ Sections of Drugs and Drug Trafficking Act, and ￫ Sections of Medicines and Related Substances Control Act ￫ Inconsistent with right to privacy entrenched in section 14 of the Constitution and therefore invalid ￫ Until Parliament made amendments, it will be deemed to be a defence to a charge under the above Acts Parliament given 24 months to rectify constitutional defects 18 September 2018 - ConCourt upheld and validated the ruling of the High Court Effectively, personal use of cannabis decriminalized 11 GLOBAL OVERVIEW Terminology and role of SA Courts Background into the September 2018 ConCourt ruling Global overview of legalization and insurance practices South African overview and insurance 12 6 05/03/2019 GLOBAL OVERVIEW Who are the biggest weed smokers in the world? How do major countries control use and possession? How do major global insurers deal with marijuana? What unique opportunities arose due to decriminalization? 13 BIGGEST WEED SMOKING COUNTRIES 20.00% 18.30% 18.00% 16.30% 16.00% 14.30% 14.00% 12.70% 11.83% 12.00% 11.10% 11.00% 10.90% 10.20% 10.00% 9.50% 8.00% 6.00% 4.00% 2.00% 0.00% Iceland USA Nigeria Canada Chile France New Bermuda Australia Zambia Zealand Percentage of population between 15 – 64 years old Netherlands only rated number 20 https://www.telegraph.co.uk/travel/maps-and-graphics/mapped-the-countries-that-smoke- the-most-cannabis/ 14 7 05/03/2019 CANNABIS AROUND THE WORLD https://romneymanassa.wordpress.com/2016/04/10/map-cannabis-laws-around-the- world/ 15 GLOBAL OVERVIEW Australia – medical marijuana legal for certain illnesses only Insurance unlikely to deny cover due to recreational use No facility / specific question to establish how marijuana is taken Low risk activity in terms of adverse health outcomes Airway disease seems to be most obvious risk factor - Research is scant with mixed results - Seems lower risk of lung cancer compared to tobacco Non-disclosure? 16 8 05/03/2019 GLOBAL OVERVIEW New Zealand – available for chronically or terminally ill patients Some will treat as non-smoker while others consider applicant a smoker, regardless of quantity Marijuana smoking on its own will not make you ineligible for life insurance Most insurers will apply smoker rates at most 17 GLOBAL OVERVIEW UK – exploring medical use (CBD with low THC only) but recreational use in no way on the horizon Estimated 7.2% of adults between 16 – 59 smoked in 2017/2018 Occasional smokers – standard rates to small loading Tobacco with marijuana – likely normal smokers rates History of mental health – declined ￫ AKT1 Gene Variations – increase risk of psychosis ￫ Increase risk of schizophrenia *Cannabidiol mainly in hemp plant **Tetrahydrocannabinol – psychoactive compound in marijuana 18 9 05/03/2019 GLOBAL OVERVIEW Legal in 10 states for recreational use Legal in 33 states for medical use https://www.businessinsider.com/legal-marijuana-states-2018-1?IR=T 19 USA LIFE INSURANCE USA ￫ Significant reduction in violent crime in several states bordering Mexico ￫ Different underwriting practices, but generally look at: Recreational or medicinal use If medicinal, what is the ailment How used, e.g. smoked, vaporized, oil, eaten, etc. How often 20 10 05/03/2019 SOME USA UNDERWRITING 1 21 SOME USA UNDERWRITING 2 22 11 05/03/2019 SOME USA UNDERWRITING 23 USA LIFE INSURANCE - INNOVATIONS Estimated cannabis market worth in USA (not just insurance) ￫ 2016 – USD 7 Billion ￫ 2025 – USD 146 Billion CannaBOP ￫ Short term insurer ￫ Insures cannabis plants/factories against losses MJ Insurance ￫ Agency shopping for best rates for cannabis users ￫ Cannabis smokers previously did not apply for life cover ￫ Little to no discrimination opens opportunities for new entrants into the market 24 12 05/03/2019 USA LIFE INSURANCE - INNOVATIONS USA ￫ Hounds Labs Inc. – breathalyzer sensitive to THC ￫ Detect marijuana in breath but not accurate in THC levels 25 GLOBAL OVERVIEW - CANADA 26 13 05/03/2019 GLOBAL OVERVIEW - CANADA Marijuana Consumption - Canada https://www.macleans.ca/wp-content/uploads/2018/04/cannabis-age.png 27 GLOBAL OVERVIEW - CANADA Marijuana Consumption - Canada https://www.macleans.ca/wp-content/uploads/2018/04/cannabis-products.png 28 14 05/03/2019 LEGALISATION AND INSURANCE Canada ￫ Medicinal use legalized 2001 ￫ Federal Cannabis Act – 17 October 2018 ￫ UW moved marijuana use out of high-risk category ￫ Sun Life among first insurers to give marijuana smoking better rates than tobacco smoking ￫ Insurance broker, Lorne Marr, surveyed major insurance providers in Canada and majority adopted similar policy ￫ Experts agree that more research is required to make accurate assessment of health benefits and risks 29 REGULATION - CANADA Canada ￫ Regulation varies by province ￫ Rules regarding promotion, packaging and advertising ￫ Householders allowed to grow up to 4 plants, except Quebec & Manitoba Intoxication / Legal Limit ￫ Blood most effective to determine THC levels ￫ Anything above 2ng/ml blood is excessive ￫ Oral fluid only tests presence of cannabis 30 15 05/03/2019 SOUTH AFRICA Terminology and role of SA Courts Background into the September 2018 ConCourt ruling Global overview of legalization and insurance practices South African overview and insurance 31 SOUTH AFRICA - OVERVIEW Did you know? ￫ Cannabis is not indigenous to southern Africa ￫ S.A. is the third largest producer of cannabis in the world (Human Science Research Council, Pretoria – 2017) ￫ SA – 3rd African country to “legalise” cannabis ￫ Who’s the other 2? Lesotho Zimbabwe Both issued licences for production for medical use only ￫ Numerous studies / sources of data but no consolidated report 32 16 05/03/2019 SOUTH AFRICA - OVERVIEW United Nations Office on Drugs and Crime (2008) Age Group 13 – 22 year old ￫ 12.7% used at least once ￫ 9.7% used in the past month Age Group 15 – 64 year old Estimated annual users ￫ Lower income – 4% ￫ Higher income – 10.1% 33 SOUTH AFRICAN INSURANCE How will we address the decriminalization of marijuana? Is there an opportunity in new product development? Explore life cycles of policies 34 17 05/03/2019 PRODUCTS Policy exclusion ￫ …under influence of a drug having a narcotic effect unless prescribed… ￫ How will one prove this? ￫ Same approach as for influence of alcohol How many people previously did not apply as cover was usually declined? How many cannabis users in a saturated SA market would now apply for life cover? 35 APPLICATION What needs to change on the application? Add Marijuana/Cannabis use to tobacco question. Elaborate on cannabis use? ￫ Quantity and frequency? ￫ In combination with other drugs? ￫ Mental illness? ￫ Method of consumption? 36 18 05/03/2019 UNDERWRITING Cannabis disclosures are seen on policies already Local underwriting manuals in line with international protocols Light to moderate use – standard to small loading Heavy use (>3 x week) – larger loadings, postpone or decline Benefits more likely to attract large loadings or decline 37 UNDERWRITING CHALLENGES Classification of users by disclosure ￫ Experimenter ￫ Occasional user ￫ Regular / Frequent user Profile of the user ￫ Age ￫ Background ￫ Education / Income ￫ Add classification of user Will we see more non-disclosures or more disclosures? ￫ Routine tests? Cost? ￫ Develop
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