Medical Marijuana

Cannabis Reimbursement Trend Grows

Courts are increasingly leaning in favor of forcing payers to reimburse workers' comp claimants for medical marijuana.
By: | June 24, 2016 • 4 min read
med marijuana4

An insurer reimbursed workers’ compensation claimant Peter Mould for $4,600 of the $10,000 he has spent buying cannabis since obtaining a state medical marijuana program registration card nearly two years ago.


Mould said he expects reimbursement from American International Group for the remainder of $10,000, and payments for any future purchases of cannabis buds bought at a dispensary licensed under Connecticut’s 4-year-old medical marijuana program.

The Connecticut claimant’s case shares similarities with others across a few jurisdictions where insurers have reimbursed workers’ comp claimants for their purchases under state medical marijuana laws.

Those similarities include injured workers reportedly obtaining relief from chronic pain — a condition that torments sufferers and claims payers alike, often because it leads to the prescribing of dangerous opioid narcotics and the costly complications they cause.

Mould, 43, believes he is saving the worker’s comp insurer thousands of dollars for the costs normally driven by opioids that doctors prescribed for him following a 2011 workplace injury. The injury led to two cervical spine surgeries and “countless hours of physical therapy” that didn’t eliminate his pain and back spasms, Mould said.

“The medical cannabis absolutely helps,” said Mould who injured his neck by pulling up glued-down carpet while employed at a restoration company.  “I don’t take narcotics anymore because of medical cannabis.”

“Reimbursement, as opposed to direct pay, is a significant legal distinction that I think somewhat insulates the carrier or self-insured employer,” — Paul H. Sighinolfi, executive director and chair, Maine Workers’ Compensation Board

Cases of workers’ comp insurers paying for marijuana across the country likely remain few and isolated to states like Connecticut, Maine, Minnesota, and New Mexico.

But Mould’s attorney, George H. Romania of the Law Office of George H. Romania LLC in Hamden, Conn., expects many more such claims. Growing recognition of the harms caused by treating pain sufferers with opioids will drive more claimants to seek cannabis, he said.

Some state medical marijuana laws protect insurers from having to pay for the drug. But where the laws allow, claimants have found judges or hearing administrators supporting their requests for reimbursements.

In Maine, for example, administrative law judges have heard five cases with workers’ comp claimants requesting payment for cannabis purchased under the state’s medical marijuana program, said Paul H. Sighinolfi, executive director and chair of Maine’s Workers’ Compensation Board.

Three of those cases resulted in the judges ordering insurers to reimburse claimants for their purchases. All three cases involved patients suffering “intractable pain,” Sighinolfi said. Two of those decisions are under appeal.

The first case heard by Maine judges involved a worker who strained his back in 1989 while lifting an industrial garage door. His employer paid for treatment at several prominent hospitals. The pain persisted and he was diagnosed as suffering from complex regional pain syndrome.

He eventually consumed between 120-140 milligrams of OxyContin daily. He also received Dilaudid, another opioid, for breakthrough pain and periodically received for morphine injections.

In a “last-ditch effort,” his physician agreed he should see a doctor known to certify patients to Maine’s medical marijuana program.

By the time of his hearing to consider whether he should be reimbursed for purchasing cannabis, he was not consuming any narcotics, said Sighinolfi, who interviewed the injured worker’s physician. Instead, the claimant found relief by vaping cannabis three or four times a day.


The cannabis strain he vapes has been bred to so that it does not contain the ingredient that typically produces a marijuana high when consumed.

“This is a very believable guy,” Sighinolfi said of the claimant.

As first occurred in New Mexico two years ago, when claims payers in other states have been ordered to fund cannabis, it hinges on reimbursing claimants for their medical marijuana purchases. Judges evidently believe that requiring reimbursement insulates claims payers from federal law prohibiting the purchase of marijuana.

“Reimbursement, as opposed to direct pay, is a significant legal distinction that I think somewhat insulates the carrier or self-insured employer,” Sighinolfi said.

Trey Gillespie, assistant vice president, workers' compensation, for the Property Casualty Insurers Association of America

Trey Gillespie, assistant vice president, workers’ compensation, for the Property Casualty Insurers Association of America

But Trey Gillespie, assistant vice president, workers’ compensation, for the Property Casualty Insurers Association of America (PCI), disagrees. He argues that the reimbursement arrangements still force underwriters to violate federal law regulating financial services companies.

A few PCI members have voiced willingness to consider voluntarily reimbursing for medical marijuana, should studies show it indeed addresses chronic pain and can help eliminate opioid consumption.

But the federal classification of marijuana as a Schedule 1 drug currently hampers such research. The U.S. Drug Enforcement Administration is now considering changing that status and is expected to announce soon whether it will do so.

“What is needed are high-quality studies on the effectiveness of marijuana in the treatment of the diseases for which it is authorized in various states, whether we are talking about glaucoma, or chronic pain,” Gillespie said.

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
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Insurance Industry

Insurer Coal Holdings Challenged

California’s chief insurance regulator asks insurers to divest themselves of thermal coal holdings.
By: | June 22, 2016 • 5 min read
coal miner in the hands of

The California Insurance Commission, citing concerns about global warming, is asking all insurance groups doing business in that state to voluntarily divest their stakes in thermal coal. The commission also wants companies to submit annual reports disclosing any additional holdings in oil, gas and coal companies.


California’s request applies to about 1,300 insurance companies doing business in the state, the largest U.S. insurance market.

The state agency is concerned the investments insurance companies make in fossil fuel companies may decline in value as energy users reduce carbon emissions and shift to renewable energy sources.

The insurance industry is a big investor in fossil fuel companies, the second largest only after pension funds, according to studies. Declines in the value of fossil fuel companies overall could have an impact. But coal represents a small percentage of carriers’ overall energy holdings.

The top 40 insurers hold more than $459 billion in fossil fuel investments, according to a new study by Ceres, a nonprofit organization that promotes action on climate change, water scarcity and other global sustainability challenges. That includes $237 billion in electric/gas utilities, $221 billion in oil and gas companies, and just under $2 billion in coal companies, Ceres said.

This is sort of like turning an ocean liner; it’s going to take a while to change direction. But you can’t sit on the sideline on this one. — Cynthia McHale, director of the insurance program at Ceres

Ceres believes an insurer’s balance sheet can be eroded by global warming on two fronts. First, warming temperatures cause more severe events requiring insurance claims payouts. Second, the insurers are heavily invested in the fossil fuel companies that produce the carbon emissions blamed for causing global warming.

California Insurance Commissioner Dave Jones also believes global warming poses risks.

That’s why he’s asked insurers to voluntarily divest from their thermal coal holdings and is also requiring detailed financial disclosures of investments in the carbon economy including coal, oil and gas.

Insurers doing business in the state who do not intend to comply must submit a request for exemption by July 1.

“I believe that climate change presents risks that insurance companies should consider with regard to their business operations, investment portfolio, and underwriting,” Jones said.

“We should all be concerned about the impact climate change will have on the future availability and affordability of insurance coverage.”

Jones is the first U.S. insurance regulator to make such a request.

It is unclear whether U.S. insurers have taken any action to identify and evaluate their potential investment exposure, Ceres said. In Europe, some insurers have already announced plans to shed their coal holdings.

“Regulator scrutiny has a real impact on insurers,” said Alex Bernhardt, principal, head of responsible investment, U.S., at Mercer.

“And fossil fuel divestment campaigns are gathering speed.”

Alex Bernhardt Principal, head of responsible investment. Mercer.

Alex Bernhardt
Principal, head of responsible investment.

Some charge Jones with overstepping his authority but he defends his actions.

“There’s growing risk that investments in coal, oil and gas will become stranded assets of diminishing or no value,” Jones said.

“This is of great concern to me as an insurance regulator and should be of concern for insurance companies as well.”

His request, while a first in the insurance industry, is not unique in California. Two of the world’s largest pension funds — CalSTRS and CalPERS — are under orders from the state legislature to divest their thermal coal holdings by July 2017.

Climate change is a potentially material risk to investors of all types, and in particular to insurers, who have exposure on both sides of their balance sheets.–  Alex Bernhardt, principal, head of responsible investment, U.S., at Mercer.


Thermal coal is coal used in heating.  Coal for the coking process in steel making is another use for the carbon-based substance.

“I do not want to sit by and then discover in the near future that insurance companies’ books are filled with stranded assets that have lost their value because of a shift away from the carbon-based economy, jeopardizing their financial stability and ability to meet their obligations, including paying claims to policyholders,” Jones said.

“The writing is on the wall, the world is shifting away from fossil fuels,” said Mindy S. Lubber, president and a founding board member of Ceres.

The rating agency A.M. Best regularly analyzes what would be higher risk assets as a percentage of an insurance company’s total capital and in general is not concerned about insurance company investments in coal.

“A.M. Best does not currently have a specific concern regarding insurers’ investments in fossil fuel companies,” said Ken Johnson, vice president in the life/health ratings division at A.M. Best.

“As a whole the insurance industry remains somewhat diversified across and within the energy sector, including fossil fuel companies.”

“Although climate change overall may provide an increased risk through the energy sector, A. M. Best believes exposures remain well managed, even for the larger concentrations, and more importantly, companies should be able to absorb increased impairments for this sector over time if they were to materialize,” Johnson said.

Should Carriers Divest?

Cynthia McHale, director of the insurance program at Ceres, said the nonprofit isn’t strictly advocating for divestment. Realistically, changes can’t happen right away as many bonds are not due for years and companies don’t want to sell at a loss.

“This is sort of like turning an ocean liner; it’s going to take a while to change direction. But you can’t sit on the sideline on this one,” McHale said.

As big institutional investors, insurers have a lot of leverage they can exercise, she said.

Insurers need to know how the fossil fuel companies they are invested in—and particularly energy company boards, which are accountable for overseeing these companies— are evaluating the future of demand and the potential for their assets to become stranded, Ceres said.

It is likely that most insurers will need to develop or consult with experts on their carbon asset risk so investments can be evaluated. Expertise from underwriting and risk management functions should be shared with the investment function and vice versa, Ceres said.


Mercer developed the TRIPTM climate risk assessment methodology as part of its 2015 report “Investing in a Time of Climate Change,” which allows investors to quantify the impact of four climate change risk factors on investor portfolios, asset classes, and equity sectors over 35 years.

“Climate change is a potentially material risk to investors of all types, and in particular to insurers, who have exposure on both sides of their balance sheets,” said Mercer’s Bernhardt.

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]
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Sponsored: Liberty Mutual Insurance

Commercial Auto Warning: Emerging Frequency and Severity Trends Threaten Policyholders

Commercial auto policyholders should consider utilizing a consultative approach and tools to better manage their transportation exposures.
By: | June 1, 2016 • 6 min read

The slow but steady climb out of the Great Recession means businesses can finally transition out of survival mode and set their sights on growth and expansion.

The construction, retail and energy sectors in particular are enjoying an influx of business — but getting back on their feet doesn’t come free of challenges.

Increasingly, expensive commercial auto losses hamper the upward trend. From 2012 to 2015, auto loss costs increased a cumulative 20 percent, according to the Insurance Services Office.

“Since the recession ended, commercial auto losses have challenged businesses trying to grow,” said David Blessing, SVP and Chief Underwriting Officer for National Insurance Casualty at Liberty Mutual Insurance. “As the economy improves and businesses expand, it means there are more vehicles on the road covering more miles. That is pushing up the frequency of auto accidents.”

For companies with transportation exposure, costly auto losses can hinder continued growth. Buyers who partner closely with their insurance brokers and carriers to understand these risks – and the consultative support and tools available to manage them – are better positioned to protect their employees, fleets, and businesses.

Liberty Mutual’s David Blessing discusses key challenges in the commercial auto market.

LM_SponsoredContent“Since the recession ended, commercial auto losses have challenged businesses trying to grow. As the economy improves and businesses expand, it means there are more vehicles on the road covering more miles. That is pushing up the frequency of auto accidents.”
–David Blessing, SVP and Chief Underwriting Officer for National Insurance Casualty, Liberty Mutual Insurance

More Accidents, More Dollars

Rising claims costs typically stem from either increased frequency or severity — but in the case of commercial auto, it’s both. This presents risk managers with the unique challenge of blunting a double-edged sword.

Cumulative miles driven in February, 2016, were up 5.6 percent compared to February, 2015, Blessing said. Unfortunately, inexperienced drivers are at the helm for a good portion of those miles.

A severe shortage of experienced commercial drivers — nearing 50,000 by the end of 2015, according to the American Trucking Association — means a limited pool to choose from. Drivers completing unfamiliar routes or lacking practice behind the wheel translate into more accidents, but companies facing intense competition for experienced drivers with good driving records may be tempted to let risk management best practices slip, like proper driver screening and training.

Distracted driving, whether it’s as a result of using a phone, eating, or reading directions, is another factor contributing to the number of accidents on the road. Recent findings from the National Safety Council indicate that as much as 27% of crashes involved drivers talking or texting on cell phones.

The factors driving increased frequency in the commercial auto market.

In addition to increased frequency, a variety of other factors are driving up claim severity, resulting in higher payments for both bodily injury and property damage.

Treating those injured in a commercial auto accident is more expensive than ever as medical costs rise at a faster rate than the overall Consumer Price Index.

“Medical inflation continues to go up by about three percent, whereas the core CPI is closer to two percent,” Blessing said.

Changing physical medicine fee schedules in some states also drive up commercial auto claim costs. California, for example, increased the cost of physical medicine by 38 percent over the past two years and will increase it by a total of 64 percent by the end of 2017.

And then there is the cost of repairing and replacing damaged vehicles.

“There are a lot of new vehicles on the road, and those cost more to repair and replace,” Blessing said. “In the last few years, heavy truck sales have increased at double digit rates — 15 percent in 2014, followed by an additional 11 percent in 2015.”

The impact is seen in the industry-wide combined ratio for commercial auto coverage, which per Conning, increased from 103 in 2014 to 105 for 2015, and is forecast to grow to nearly 110 by 2018.

None of these trends show signs of slowing or reversing, especially as the advent of driverless technology introduces its own risks and makes new vehicles all the more valuable. Now is the time to reign in auto exposure, before the cost of claims balloons even further.

The factors driving up commercial auto claims severity.

Data Opens Window to Driver Behavior

To better manage the total cost of commercial auto insurance, Blessing believes risk management should focus on the driver, not just the vehicle. In this journey, fleet telematics data plays a key role, unlocking insight on the driver behavior that contributes to accidents.

“Roughly half of large fleets have telematics built into their trucks,” Blessing said. “Traditionally, they are used to improve business performance by managing maintenance and routing to better control fuel costs. But we see opportunity there to improve driver performance, and so do risk managers.”

Liberty Mutual’s Managing Vital Driver Performance tool helps clients parse through data provided by telematics vendors and apply it toward cultivating safer driving habits.

“Risk managers can get overwhelmed with all of the data coming out of telematics. They may not know how to set the right parameters, or they get too many alerts from the provider,” Blessing said.

“We can help take that data and turn it into a concrete plan of action the customer can use to build a better risk management program by monitoring driver behavior, identifying the root causes of poor driving performance and developing training and other approaches to improve performance.”

Actions risk managers can take to better manage commercial auto frequency and severity trends.

Rather than focusing on the vehicle, the Managing Vital Driver Performance tool focuses on the driver, looking for indicators of aggressive driving that may lead to accidents, such as speeding, sharp turns and hard or sudden braking.

The tool helps a risk manager see if drivers consistently exhibit any of these behaviors, and take actions to improve driving performance before an accident happens. Liberty’s risk control consultants can also interview drivers to drill deeper into the data and find out what causes those behaviors in the first place.

Sometimes patterns of unsafe driving reveal issues at the management level.

“Our behavior-based program is also for supervisors and managers, not just drivers,” Blessing said. “This is where we help them set the tone and expectations with their drivers.”

For example, if data analysis and interviews reveal that fatigue factors into poor driving performance, management can identify ways to address that fatigue, including changing assigned work levels and requirements.  Are drivers expected to make too many deliveries in a single shift, or are they required to interact with dispatch while driving?

“Management support of safety is so important, and work levels and expectations should be realistic,” Blessing said.

A Consultative Approach

In addition to its Managing Vital Driver Performance tool, Liberty’s team of risk control consultants helps commercial auto policyholders establish screening criteria for new drivers, creating a “driver scorecard” to reflect a potential new hire’s driving record, any Motor Vehicle Reports, years of experience, and familiarity with the type of vehicle that a company uses.

“Our whole approach is consultative,” Blessing said. “We probe and listen and try to understand a client’s strengths and challenges, and then make recommendations to help them establish the best practices they need.”

“With our approach and tools, we do something no one else in the industry does, which is perform the root cause analysis to help prevent accidents, better protecting a commercial auto policyholder’s employees and bottom line.”

To learn more, visit



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.


Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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