Breaking New Ground: How Medical Cannabis Is Reshaping Australia's Insurance Landscape
A Conversation with Andrew Proudfoot
Read time: 6-7 mins
Risk and life insurance expert Andrew Proudfoot reveals why cannabinoid medicine is driving unprecedented changes across a variety of insurance domains, including the private health, workers' compensation, and life insurance sectors, and what it means for patients, prescribers, insurers and governments.
Insurance Medicine: Bridging Law, Economics, and Cannabinoid Research
Andrew Proudfoot isn't a typical financial adviser and lawyer. With special interests in insurance, superannuation, and estate planning for 18 odd years, having managed millions in claims, and presenting with a Bachelor of Laws, Bachelor of Economics, Master's in Taxation and Financial Planning, his skill set is different. Having just submitted a thesis for his Master of Philosophy under Associate Professor Mike Armour at NICM Health Research Institute, Western Sydney University on insurance medicine and cannabinoids for endometriosis, he's uniquely positioned to comment at some interesting intersections. The costs of illness, healthcare access, reimbursement, and the balance of financial protection for the community in misunderstood phenomena make for intriguing insights.
While undertaking his MPhil, Proudfoot has published in prestigious journals including the Australian and New Zealand Journal of Obstetrics and Gynecology and Nature Drugs on cannabinoids, insurance and endometriosis, with others to come. Over his 18 odd years handling claims for critical illnesses and disability, he's witnessed firsthand how clients exhaust conventional treatments before turning to cannabinoids.
"A lot of my clients, obviously, when the proverbial hits the fan, if they're disabled or suffer a major traumatic illness like cancer or permanent disability, they'll exhaust the first and second line therapeutics and, you know, last ditch efforts often turn to cannabinoids to help with either recovery or, you know, if they're terminally ill, then, you know, it can be useful in those settings," Proudfoot explains.
This dual perspective of strategic life risk insurance, money management, and legal advisory services, combined with academic interest in insurance medicine, has propelled his work towards exploring systems that support rather than penalise medicinal cannabis patients.
Private Health Insurance: Early Adopters Leading the Way
In a surprising development, private health insurers have emerged as unexpected quasi-suporters of medicinal cannabis access in Australia.
"It's been really pleasing that so many private health insurers in Australia are reimbursing for cannabinoids", Proudfoot notes. "So, depending on the pharmaceutical limits within your private health insurance policy and the quality of your policy, the higher the quality of the contract, the typically higher the pharmaceutical benefits sublimit within your extras component of your policy for reimbursement."
This reimbursement occurs despite most Australian cannabis products remaining non-PBS unapproved, unregistered medicines. Despite this, Proudfoot identifies a critical limitation:
"The problem we have in private health insurance is very small sub-limits for reimbursement. So often, most private health insurance policies will only cover you for $500 bucks a year."
With patients in his endometriosis research spending an average of $300 monthly on cannabis as medicine (though he notes prices have since decreased since his initial data was compiled and studied), these small annual sub-limits provide minimal financial relief. His recommendation?
"I would definitely encourage private health insurers and the federal government to work out ways to increase those sub-limits for pharmaceutical reimbursement of cannabis. I think that would help patients a lot."
The Economics of Substitution: What Happens When Cannabis Replaces Other Treatments?
Economists describe substitution effects as occurring when one product replaces another in consumer behaviour. Proudfoot's research on endometriosis patients revealed compelling real world cross sectional data that has significant implications for insurance medicine.
"For example, we saw some reduction in physiotherapy use in endometriosis patients. A lot of endometriosis patients will get pelvic physiotherapy, we already knew that cannabis medicine substitutes and decreases the need for opiates and non-steroidal anti-inflammatories. So that was an interesting little data point on physiotherapy that should get insurers and people thinking," he explains.
Perhaps most significantly for insurers' bottom lines:
"We also saw, critical for insurance purposes, reductions in alcohol and tobacco in those who used tobacco."
These substitution effects weren't limited to legally prescribed products.
"We seemed to see higher reductions in substitution effects generally from legal products compared to illicit products, which was super interesting. I think that's somewhat validating for the legal sector in terms of improved consistency," Proudfoot notes, while carefully pointing out correlation versus causation and sample limitations.
The overall implications on insurance medicine though could be substantial. When patients reduce reliance on multiple conventional treatments, other services, insurers benefit from decreased claims burden, and disease progression while patients can experience improved health and financial outcomes.
Workers' Compensation: International Evidence Drives Australian Progress
Perhaps the most compelling evidence for cannabis in insurance medicine comes from North American workers' compensation systems. Proudfoot remarks on research from the National Bureau of Economic Research examining the impact of cannabis legalisation on work capacity.
"They found that workers' compensation receipt declines in response to recreational marijuana law adoptions, both in terms of the propensity to receive benefits and the benefit amount, and they estimated complementary declines in non-traumatic workplace injury rates and the incidences of work-limiting disabilities," he reports.
The researchers' conclusion? The primary driver was "an improvement in work capacity, likely due to access to an additional form of pain management therapy."
Australia is beginning to follow suit. "We've got tribunal-level decisions saying, yes, you can get cannabis reimbursed under workers' compensation in that jurisdiction," Proudfoot explains, referring to published cases from New South Wales' personal injury commission.
"We're seeing it being supported through tribunals. Now, they're not at a significant precedent level as they're not courts. They're tribunals. BUT: We've got evidence-informed decisions by tribunal members helping people along to get reimbursement for cannabis to help with workplace injury recovery."
This represents a significant shift in Australian insurance medicine. "That's an indirect state-supported kind of function," Proudfoot emphasises. "So we're seeing private health insurance, workers comp, we're seeing the insurance medicine ecosystem build out to support the use of cannabinoids in medicinal settings, which is really good."
Life Insurance: Navigating Discrimination and Legal Complexities
The life insurance sector presents unique challenges and opportunities. Unlike private health insurance, life insurers are legally permitted to discriminate based on health status under section 46 of the Disability Discrimination Act 1992 (Cth), provided they have a reasonable, statistical or actuarial basis.
This creates complications for cannabis patients. "What we found in our study that was really interesting, when it comes back to cannabinoids and life insurance, is that the life insurance sector (in some respects, and I stress not universally), was dumping cannabis consumers in with tobacco smokers," Proudfoot reveals. Illicit cannabis is traditionally smoked and historical disclosure questions and framing has centered around this.
This practice may violate legal requirements to make distinctions on evidence around the respective substances themselves and their consumption methods. Drawing on research by Dr. Donald Tashkin, a pulmonary medicine specialist who for decades has been trying to find harms associated with inhalation of cannabis, Proudfoot notes that Tashkin’s "2006 work found for example there's no increase risk of lung cancer even in heavy cannabis smokers, and modest but significant short term bronchodilation both in healthy subjects and in those with asthma."
The legal implications are significant: "Your ability to legally discriminate depends on the information that you have. Well, the obligation is on the insurer to ask more questions around their method of consumption. But also, you have to have what's called an actuarial or statistical data within your data set as a life insurer actually to discriminate. If you don't, you may end breaching the law."
Furthermore, most insurer data comes from illicit markets rather than prescribed medicines:
"If there’s limited to no evidence-based medicine for risk of death, disability, trauma, you can't discriminate if you just don't have the statistical basis or you should really have some other reasonable basis. The tests or thresholds will be uncertain and for some conditions unknown. But, if it's not reasonable on what is known about cannabinoids or the way its consumed, they might be breaching the law."
Proudfoot's message to patients is clear: "Don't assume that simply because you're a cannabinoid medicine consumer, that you're not eligible for cover. It really, underwriting depends on how you present as a human in terms of, if you've got certain ailments, life insurers will rate, they will rate you based on, you know, what risk you are associated with those primarily. They will look at the medicines you use and cannabis is one of those. Get good advice and position your answers and disclosures carefully and prudently so there is no risk of incorrect representations. Challenge diplomatically where needed. A life insurance relationship is one of utmost good faith for the parties and that must be remembered."
The Endocannabinoid System and Female Reproductive Health
Proudfoot's investigations into endometriosis reveal fascinating insights into why cannabinoid therapy shows particular promise for this condition which affects at least one in nine Australian women of reproductive age.
"CB1 and CB2 endocannabinoid system receptors have been found in endometriosis lesions, and so that's why cannabinoids, as an exogenous replacers, can hit those lesions whether expressed in the pelvic area or more broadly throughout the body," he explains. "It is a disease characterised by inflammation. If these endometrial lesions are expressed outside the uterus people with endo can experience significant localised and body-wide chronic pain as well as other major health issues like fatigue, infertility, anxiety and depression."
The therapeutic implications vary by cannabinoid: "In our research, we see certainly THC predominant preparations for, you know, the pain aspects around CB1 and then, you know, cannabidiol from an inflammatory point of view with the broader endocannabinoid system interactions."
This research represents more than academic interest. "Justin and Mike’s work has been my inspiration," Proudfoot says, referring also to fellow researcher Justin Sinclair, a PhD candidate. "Justin really is the inspiration behind so much of this work exploring which cannabinoids could be indicated for women's health and particularly endometriosis."
Current Regulatory Challenges: The TGA Safety and Efficacy Inquiry
Proudfoot shares concern about the TGA public consultation into medical cannabis safety and efficacy, which closed for submissions in early October 2025, viewing it as potentially driven by political considerations rather than good quality evidence. His frustration centres on what he perceives as double standards in evidence requirements:
"You've got very noisy interest groups from the medical community that are equally calling out for the best quality evidence-based medicine for using medicinal cannabis in the first place. At the same time these folks are suggest there is no quality evidence (when there clearly is for certain conditions), they are also purporting increased presentations to emergency departments due to cannabis but provide no peer reviewed evidence of this! I respond, show me your high quality evidence-based medicine that suggests that there's been an increase in presentations to emergency departments from legal cannabinoids, because I'm not seeing it."
The fundamental problem, he argues, is lack of data infrastructure:
"The one thing that's very clear out of this is that there's no proper pharmacovigilance, the basics of having an understanding of how many products are actually being prescribed and dispensed for a given patient. We just do not have good data at all. It’s a whole other beast of a discussion around whether that’s required given the safety profile of cannabinoids vs other schedule 8 meds, but we are where we are in terms of scheduling and the law as it stands."
The Path Forward: Evidence-Based Insurance Medicine
Despite regulatory uncertainties, Proudfoot remains optimistic about the trajectory of insurance medicine support for cannabinoid therapy.
"Why that's important is because to the extent our community does not have randomised controlled trial evidence from an evidence-based medicine point of view, we are still seeing the commercial reality of insurance medicine supporting people through recovery and being themselves again. And that's really, really important for just the general human condition. And so that's what is exceptionally pleasing from my point of view," he emphasises.
Andrew’s work demonstrates how insurance medicine can bridge the gap between academic evidence and real-world implications, creating pathways for patients whilst building the evidence base that will ultimately satisfy even the most stringent regulatory requirements.
For healthcare professionals navigating this complex landscape, Proudfoot's research and advocacy provide a roadmap: focus on patient-centred outcomes, engaging with insurance systems proactively, and building legal and economic systems in the context of available clinical evidence.
Professional Perspective
It is clear that the insurance medicine framework will increasingly determine practical patient access. Andrew Proudfoot's multidisciplinary approach, combining legal, economic, consulting and research expertise, represents the kind of innovative thinking required to ensure cannabinoid therapy takes its rightful place in evidence-informed healthcare. Healthcare professionals prescribing medical cannabis should familiarise themselves with insurance medicine principles and advocate for their patients' access to appropriate cover and reimbursement. Having been recently appointed as Independent Board Observer to the Australian and New Zealand College of Cannabinoid Practitioners Board (who provide evidence based education, guidelines, information and peer support for health care practitioners) he plans for this to be one of the ways he will support the cannabinoid medicine and broader community post graduation.
Andrew Proudfoot is completing his Master of Philosophy at Western Sydney University, supervised by Associate Professor Mike Armour, Justin Sinclair and Dr Sarah Duffy. He practices as a specialist financial planner in life risk and succession matters and as a solicitor specialising in estate planning, trusts, superannuation and cannabis sector/cannabinoid medicine matters/advice.
Disclaimer: This information is shared with a global readership for educational purposes only and does not constitute medical or business advice. All patient-related information has been de-identified OR fictional to protect privacy. Nothing in this article is intended to promote the use or supply of medical cannabis to members of the public.
