Rates will continue to rise
Darrell Greer
Northern News Services
Rankin Inlet (Apr 30/01) - A Northern-owned insurance company to handle hamlet liability insurance would have to be a project of both Nunavut and the NWT.
Ron Dennill, of the insurance broker Aon Reed Stenhouse, was in Rankin Inlet this past week for the Nunavut Association of Municipalities' AGM.
Dennill said a Northern-owned company would be one alternative to rising liability costs, but it won't happen overnight.
He said even if the two territories were to combine forces, it would still be a small amount compared to similar projects in the south.
"When you look at projects like this in B.C. and Alberta, the premiums put into those are around $10 million and we're not even close to that," said Dennill.
"In fact, it may not even be feasible for us to it. We're going to have to do a lot of work on it and most likely hire an independent firm to conduct studies on the project."
Rising costs of doing business in the world of municipal insurance has led many insurance companies to withdraw from the field.
The Walkerton, Ont. water crisis fuelled the exodus and Nunavut hamlets are facing a stiff increase in liability premiums.
"Walkerton was the icing on the cake because insurance companies decided if the water's not safe in Canada any more, what else is out there we don't know about?
"There were nine deaths there and a number injured, so that claim will probably exceed the policy limits and the legal costs will be higher than that."
Historically, the insurance business goes in cycles with rates falling and rising during a 10-year period.
Insurance companies have been losing money for the past couple of years and are increasing rates in every class of business.
Dennill said it has been difficult to find insurance companies willing to underwrite in the area of municipal insurance, with only one (St. Paul Insurance Co.) tendering an offer to Nunavut.
"Insurance rates are going to continue to rise for a couple of years here, but, if you look at what's happened in the past, rates lowered and then bottomed out last year."
