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You can count on every government that has been booted from office after a long stint in power to leave behind a smoking hot mess or two.

B.C.'s new NDP government recently discovered one such smoldering disaster bequeathed by the outgoing Liberals over at the Insurance Corp. of British Columbia. This week, Attorney-General David Eby described the state of the books at the public auto insurance provider as a "financial dumpster fire."

It has the makings of a nice little political scandal. There is abundant evidence to suggest that while the Liberals were siphoning more than $1-billion out of ICBC's reserves to make their own books look better, they were consciously ignoring a looming crisis at the Crown corporation. Costs were far outstripping revenues.

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Instead of allowing an independent utilities commission to set rates that might cover costs, as was done for years, the Liberals effectively took control over this area for purely political reasons and imposed hard limits on how much those increases could be. As it turned out, they weren't nearly enough.

In the last five years, total revenue increased by 36 per cent while expenditures went up 55 per cent, which represented a differential of $760-million. The cost of settling bodily injury claims over that time rose 38.5 per cent, or $575-million. By component, the largest increase in injury claims was for pain and suffering, at $348-million, a hike of more than 50 per cent, according to ICBC.

Three months ago, ICBC suggested its year-end losses would be $200-million. On Monday, Mr. Eby said they are likely going to be closer to $1.3-billion. The corporation is losing $3.5-million a day. Now the New Democrats are going to have to find a way to ameliorate the situation without blowing a massive hole in their February budget. It will mean taking some unpopular measures. Many would say it's about time.

B.C. uses the legal system to settle disputed claims. In other words, if I get in a fender bender and suddenly feel soreness in my neck, I can make a claim for a soft tissue injury, or pain and suffering. (Or both.) ICBC will offer me something but if I don't like it, I can hire a lawyer who will often work on commission to take my case. It will drag on for a few years, in some cases, and usually I, the plaintiff, will walk away with far more money courtesy of the courts than the utility was offering.

That's why Saskatchewan and Manitoba, two provinces operating Crown monopolies with the lowest automobile insurance rates in the country, don't pay for pain and suffering. Manitoba has no-fault insurance (which sets established payouts for most claims) while Saskatchewan offers both options, no-fault and the courts, although 98 per cent of drivers are enlisted in no-fault because they prefer to get their money up front rather than going before a judge. Ontario has a huge $30,000 deductible for pain and suffering, while Alberta caps soft tissue injuries at $5,000.

Mr. Eby has said B.C. won't move to a no-fault model or a 100 per cent privatized system such as Alberta, but he agrees something has to be done. Rates will have to go up, but not the estimated per capita increase of $400 a year necessary to cover the more than $1-billion in losses. It's almost certain caps on injury claims will be introduced. Rates for luxury automobiles will also have to go up. Metro Vancouver has the highest concentration of cars valued over $150,000 per capita anywhere in North America. These machines can cost upwards of $100,000 to fix, depending on the damage. Meantime, the rates those drivers are paying don't nearly reflect those exorbitant body shop costs.

For the New Democrats this shocking news immediately puts the bottom line numbers in its upcoming budget in jeopardy. On the other hand, a deficit could now easily be blamed on the Liberals, who ignored warnings in a 2014 independent auditor's report that this fiscal Armageddon at ICBC was coming. The report recommended putting firm caps on awards for soft tissue injuries as a way of getting the corporation's costs under control. The Liberals dismissed the suggestion out of hand.

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It will be interesting to see what, if any, impact this has on the Liberals' leadership convention this weekend. Will delegates feel this matter is another reason to choose someone not tied to the last government?

After all, they may fear that they will carry the smell of a financial dumpster fire everywhere they go.

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