The levy change announced today by the Honourable Wes MacAleer, Minister of Community Services and Attorney General, will increase the levy charged to auto insurers effective January 1, 2000, from $8.52 per earned vehicle to $19.50.
Minister MacAleer notes that the base rate on which the levy is calculated has not been changed for eight years and that the rate decision follows a health care cost study by an independent consultant under the direction of the Department of Health and Social Services. The study focused primarily on costs incurred as a result of auto accidents and also included comparisons with similar costs in New Brunswick.
In 1992, Prince Edward Island became the first jurisdiction in the region to implement a levy system to recover a portion of the medical and hospital costs from third party insurers. The levy system is beneficial to government, insurers and the public as it replaces costly and lengthy civil litigation actions launched against insurance companies. Shortly after PEI adopted a "third party" auto levy, the other three Atlantic provinces implemented a similar system.
"The primary reason for making the rate change is to recover a portion of the rising health care costs incurred by injuries from automobile accidents and to ensure our levy rate is within a reasonable range, similar to other Atlantic provinces," said Minister MacAleer. "A key benefit of the auto levy is that it minimizes the legal, administrative and other costs that would be incurred in recovering costs on a case-by-case basis. During the cost review process, the insurance industry was kept apprised of developments and findings through discussions with the Insurance Bureau of Canada, the industry association which represents the companies that insure automobiles."