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A chronic conundrum

What should the health insurance and protection industry do about cannabis?

‘Chronic’ is not a popular word in the world of private medical insurance (PMI). After all, PMI isn’t meant to pay for treatment of chronic conditions. It’s meant to pay for prompt, top quality treatment for acute ones. In-then-out, nice hospital, own room, glass of wine, top consultant, job done. Back to normal as quickly as possible.

But there’s another type of ‘chronic’ that could become a feature of the health insurance and protection landscape in the years to come.

‘Chronic’ – so I’ve overheard on the streets of where I live in South London – is slang for potent strains of cannabis. Marijuana. Ganja. Hash. Pot. Weed. Maryjane (do people still say that?). Bhang. You get my point.

What, you might say, has that got to do with the rather staid world of health and protection insurance?

Potentially quite a lot.

It’s no secret of course, that cannabis is big business. The black market for recreational cannabis is, obviously, dope. It’s big money; analysts at Barclays recently told investors in a note that the total US cannabis market, if legalised today, could be worth $28bn, increasing to $41bn by 2028 on a pre-tax basis.

That kind of money doesn’t go unnoticed. Coca-Cola – no slouch in the business world – is reportedly looking into adding CBD into some of its products as part of a “wellness” promotional push.

That “legal” (in some places) stuff – and Canada has been pushing this for a while – are cannabidiol (CBD) and the psychoactive component of the marijuana plant, tetrahydrocannabinol (THC). The boffins at Agribusiness – a business owned by Health Insurance & Protection’s parent company Informa – can tell you more here.

But it’s not just in North America that medicinal cannabis is becoming big business. Last year, a United Nations report revealed the UK to be the biggest producer and exporter of legal cannabis in the world.

And the haze of medicinal cannabis is wafting through Whitehall and the City, after Home Secretary Sajid Javid announced that it would be made available on NHS prescription from November, including CBD and THC.

Already there are cries of “two-tier” healthcare, where individuals can pay for medicinal cannabis to treat a range of conditions, but others are denied NHS-funded access to it. That is a dam that will eventually burst – so what should private healthcare providers and medical insurers do to stay ahead of the game?

Certain big insurers have been pulling out of investment in tobacco manufacturers, along with other so-called “sin stocks”. It would be unfair to suggest they are doing that just for commercial reasons; but that money has got to be invested somewhere and supplying pain-alleviating treatment to children is hardly bad PR. We’re in a world, after all, where Philip Morris International (ironically abbreviated to “PMI”) describes itself as “a leading tobacco company” that is “committed to designing a smoke-free future”.

Earlier this year, that same company launched a life insurance business, Reviti, that will offer discounted plans to former smokers. You couldn’t make it up.

But where does that leave health insurance? What should be done about “chronic”? As the medical insurance landscape evolves and people live and work for longer, health management – and that includes “chronic” conditions – is going to rise up the corporate (and indeed individual) agenda.

Large corporates with self-funded healthcare trust schemes are likely to move quickest on this, just as they have been on the transgender debate and other “out-of-scope” health-related matters that traditional PMI shies away from.

But all health and protection insurers – and reinsurers – need to keep an eye on this. There is little point in hand-wringing or moralising. It’s not something that’s just going to go away; in fact, it’s just the result of a demand and need that is, well, chronic.