Cannabis Impairment and the Unintended Acceptance of Risk

In its simplest definition, insurance is the transfer of risk from one party to another. The exchange involves an assessment of that risk, a calculation of the premium to be charged if it is accepted, and a future promise to protect the transferring party from specific types of loss. The fundamental component of an insurers’ underwriting function is to evaluate a proposed risk and to determine the appropriate rate to charge for it, ensuring that adequate funds have been collected to pay for the likelihood of future claims. The cornerstone of any sound underwriting practice is the insurers’ ability to adequately match rate to the risk they choose to accept. In the context of automobile insurance, this practice entails several factors that should be included within this risk assessment, such as the property to be insured, the age of the driver, the geographic territory in which the vehicle will be principally driven and garaged, and the driving history of the individual. These factors highlight why state-based regulation of insurance remains so important.