PEI adopts significantly higher car insurance levy in 2013

Prince Edward Island has increased the levy charged to companies providing auto insurance to more than $32 per vehicle to help with recovering health care costs associated with auto accident victims.

It is anticipated the increase, which took effect Jan. 1, will raise approximately $1 to $1.2 million annually, says Robert Bradley, PEI’s superintendent of insurance. The revenue “specifically recovers identified recoverable health care costs,” Bradley noted in an e-mail to Canadian Underwriter.

He points out the levy had only increased from $19.50 in 2000 to $20.64 in 2012. “The annual levy adjustment had not been effective in keeping the levy sufficient to cover recoverable rising health care costs,” Bradley notes, adding that a “study of actual costs confirmed this.”

The study provided a range and the province “selected what it felt was an appropriate amount,” he writes. “The levy is $32.49, an increase of about $10 from where it would have been in 2013, if the study had not taken place.”

Individual insurance companies will decide whether or not to pass along the extra cost to customers.

Canada’s non-government home, car and business insurers pay more than $2 billion annually into the country’s health care system, most of it related to auto insurance, notes information from the Insurance Bureau of Canada (IBC).

Any emergency care or doctor visits for individuals seriously injured in car crashes are initially paid for by provincial health care plans, although most treatment received is probably ultimately covered by auto insurance.

IBC notes that insurers reimburse provincial health plans for treatment given to crash victims, and is an important source of funds for provincial health care systems in Alberta, Ontario, New Brunswick, Nova Scotia, PEI and Newfoundland and Labrador.