The effect of legalisation of cannabis on the insurance industry

The legalization of private cultivation, possession and the use of cannabis in South Africa has had the effect of changing the law which will undoubtedly require transformation in the insurance industry.

The Constitutional Court in Minister of Justice and Constitutional Development and Others v Prince (and others) has given Parliament 24 months to amend current laws criminalising cannabis use. In coming to its conclusion, the court looked at the right to privacy, the use of cannabis for medical and religious reasons, and the fact that other countries, such as Canada, recently adopted a similar approach.

The change in law will likely affect the insurance industry. For example, insurers will have to look at homeowners’ coverage for claims related to cannabis use and possession. Motor insurers will also have to consider issues relating to driving while under the influence of cannabis, for instance.

We take a more detailed look at the effects of the legalisation of cannabis on the insurance industry in our December 2018 Insurance Focus (page 7).

First published by: Financial Institutions Legal Snapshot