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Made-in-Nunavut insurance program almost inevitable

Hard sell for Iqaluit's senior administrator

CHARLOTTE PETRIE

CAMBRIDGE BAY - The papers may be drawn up but no one has signed on the dotted line – yet. Insurance broker Willis Canada is pushing hard to get municipalities to seal a deal that would bring about Nunavut's first self-insurance program.

Dean Thibaudeau of Willis Canada gave a slick presentation to members of the Nunavut Association of Municipalities during its annual general meeting in Cambridge Bay April 26 to 29, but it wasn't slick enough to grease by Ian Fremantle, Iqaluit's new chief administrative officer.

It's going to take a lot more than catchy clichés, industry buzzwords and a tidy power point presentation to persuade Fremantle that the new self-insurance scheme isn't itself an accident waiting to happen.

"We need to do our homework and look at every possible option. Maybe I'm being naive. Maybe this is the best option. But somebody's going to have to convince me of that," Fremantle said.

Namix is a recently established, fully licenced insurance company owned and administered by the Nunavut municipalities. It was created with the help of Willis Canada as an alternative to paying exorbitant premiums to outside firms.

Thibaudeau explained that over the past 10 years insuring municipalities has become a liability for insurance companies and as a result, premiums have gone through the roof.
"The bottom line is you've been riding the insurance roller coaster and it's dangerous and expensive," he warned.

"Namix offers stable and competitive pricing, it's reliable and there will be no spikes in prices. You'll be much less reliant on the GN for financing. That's an important win."

Just how much less reliant on the GN municipalities will be is up for debate.

The department of community government and transportation contributed $5 million to help start up Namix. The money will be invested to increase – or decrease – its worth over time.

But when the start-up fund is depleted, Namix can turn to its own insurance company for several more million. Once that reserve is maxed out, the municipalities will have to turn to the GN once again.

"I don't think everyone was convinced that this is the only solution or the correct solution. The focus that came across was that it was the better of two evils - it's either this or paying sky-high premiums such as we have in the past," Fremantle said.

In a separate meeting of SAOs, the issue was debated at length.

"The question was asked whether or not they went out for other proposals and what were they? I don't feel that was really answered. We were told that the other premiums were higher but we weren't given any facts or evidence," he said.

"The only way you can bring your premiums down is to reduce your number of incidents or losses. To do that you've got to hire people with the right qualifications, training them properly in preventative measures."

Furthermore, if some of the municipalities exercise due diligence, have good training programs and put in few claims, why should they subsidize a municipality that isn't training people and is running up a number of losses in a year, Fremantle asked.

"My concern is that even with the assistance of the GN, I don't see the surplus as being a real help, I don't think that it will last five minutes. We've got houses in Iqaluit worth 400K. You only need three or four of those a year and that surplus is gone.

"We've got buildings worth several million like the hospital, arena. So many buildings here worth several million dollars it would make that surplus look like pocket change."

Included in the agreement are two termination clauses that say the municipalities must give five years' notification of termination, thereby locking them for at least that long. In contrast, the insurer only needs to give only five minutes notice, noted Bill Harding, SAO for Arctic Bay.

"My interpretation of that is we cannot terminate this contract for five years. However, if the advisory board wishes to dissolve the exchange they can so with a simple meeting and a unanimous decision. And that's the end of the exchange, and the hamlets are responsible for it after that date," Harding said.

So far, the papers haven't been signed, but Thibeaudaux finished his presentation with a reminder to mayors to get the signed documents in as soon as possible.

• See also Understanding Namix in this issue

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