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Psychedelic Therapy and Mental Health: A Trip Too Far?

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    May 2024

    In January 2024, in a first for Canada, Health Canada granted PharmAla Biotech a Controlled Drugs & Substances Dealer’s License, permitting the company to sell MDMA1 and psilocybin to treat patients with psychiatric conditions, such as depression and post-traumatic stress disorder (PTSD).2 Following the lead of some U.S. states, Alberta introduced regulations last year that allow the prescription of psychedelics. Accredited medical facilities offering psychedelic-assisted therapy have now started to open across Canada.3

    While some will portray psychedelics as promising medications for treatment-resistant major depression, anxiety, and PTSD, others may view this development as a slippery slope towards increased illicit drug use and addiction to other substances. Canada made bold strides internationally with its legalization of cannabis, but are we ready to pursue the psychedelic renaissance? And how will this impact life and critical illness underwriting?

    Psychedelic-assisted psychotherapy

    Psychedelic-assisted psychotherapy (PAP) is a type of psychiatric practice that includes a pharmaceutical-grade psychedelic drug, such as MDMA or psilocybin, as part of a psychotherapeutic treatment program. Patients typically will receive a moderate to large dose administered during a number of sessions that are spaced over several weeks.

    The procedure for psychedelic therapy differs from conventional psychiatric medication. While conventional medication is usually taken without close, immediate supervision, psychedelic therapy is administered in a controlled, supervised environment where the therapist provides support throughout.


    Because the drugs administered are pharmaceutical-grade and involve larger doses, PAP is quite different to microdosing. Microdosing is the practice of consuming very small amounts of an illegally obtained psychoactive substance, usually LSD or other hallucinogen like magic mushrooms, in order to improve productivity, creativity, mood and overall sense of wellbeing, without inducing a ‘high’ or signs of intoxication. Typically, small doses are taken regularly or intermittently for an extended period; the duration of use varies from person to person. Although microdosing may be used in a therapeutic setting, this is relatively uncommon.

    Despite its popularity, problems abound in relation to microdosing, as dose amounts are neither standardized or regulated; unintended and unpredictable side-effects are possible. There is also the potential for developing tolerance, meaning that over time, one might need to increase the dose to achieve the same effects. 

    What should underwriters look for?

    As psychedelic therapy is used to augment conventional psychiatric treatment, where does this leave us from an underwriting perspective?

    Until there are more long-term studies available, the jury is out on whether any risks could arise from controlled medical use. However, for applicants using prescribed psychedelic medication  and where an underwriting offer can be made, Munich Re suggests the following:

    • Underwrite the underlying psychiatric condition(s) for which psychedelic therapy is being prescribed.
    • Confirm that medication is provided under the direct supervision of a psychiatrist or by a physician in consultation with a psychiatrist.
    • Ensure there is no evidence of any current or prior substance abuse.
    • Pay close attention to any driving criticism and/or risk-taking behaviour.

    Should insurers be concerned?

    If cannabis has taught us anything, the acceptance of psychedelics as medicinal substances may simply be a short stop before decriminalizing and commercializing. Insurers should continue to do their due diligence and be vigilant for the presence of lifestyle risk factors, now or in the past, as there is potential for increased risk-taking behaviour. Whether these new treatments will have an impact on mortality and morbidity results is yet to be seen.

    Munich Re will be closely monitoring all developments on this hot topic in order to recognize risks at an early stage and help all our clients manage them appropriately. If you have any questions about assessing the risks of psychedelic therapy and microdosing, please contact us.

    Contact the Author
    Reece Hodgson
    Assistant Vice President, Underwriting