The board says insurance companies have the option of bringing in all or part of the increase starting Nov. 1 and over the next three years.
The decision comes after the board's annual public rate review of mandatory automobile insurance.
The board says a double-digit increase was actually warranted because the average cost of bodily injury claims in 2012 rose significantly.
That's even though the number of claims went down.
But the rate review board says it wanted to take a more measured approach.
“A five per cent increase, which works out to on average $30 per year, reflects current insurance trends while still keeping premiums at a reasonable level.” board chairman Alfred Savage said in a release Thursday.
The decision applies only to coverage required by law and includes third-party liability and accident benefits coverage. It does not include optional collision or comprehensive coverage. Those premiums are set by individual insurance companies and monitored by the board.
The board says it has reduced premiums by 13 per cent since 2004 and will closely monitor the effects of this year’s increase.
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