Rankin Inlet (May 14/03) - Nunavut has entered the insurance biz.

The Nunavut Association of Municipalities (NAM) Insurance Exchange (NAMIX) is the first of its kind in the territory.

The NAMIX was born on April 1 and can cover $2 million in property losses.

The project was officially announced this past week at the NAM's AGM in Cambridge Bay.

Community Government and Transportation Assistant Deputy Minister Shawn Maley says municipalities have been battered by rising insurance costs for the past two years.

"The bottom line for municipalities is that they can't get insurance," says Maley.

"Our premiums would have risen by about 600 per cent this year because of our claims in Repulse Bay and Clyde River.

"When your historic losses are about $1 million and coverage is going to cost you $6 million, you're not insurable."

The NAMIX is being supported by the Nunavut government, which will pay $5 million into the exchange during the next four years.

Maley refers to the initiative as a reciprocal, self-insured fund.

"You self-fund a pool of money (a box) and buy insurance such as catastrophic loss (single claims over $4 million) and stock loss ( a number of claims totalling over $4 million).

"You can afford that outside insurance, rather than pay inside money to a broker.

"The GN will assist with hard cash to buy insurance and underwrite the guarantee of the box until it grows."

Maley says while GN dollars fund premium cost, municipal dollars will go into "the box" to be invested.

"We know $1 million will be lost in claims, legal fees, etc.

"In year one, they may only have $400,000 in residual money, but as that money grows the GN's responsibility will decline.

"Hopefully, five years from now, the fund becomes self-sufficient."

Males says the initiative will force municipalities to be responsible in their ownership.

Before NAMIX, communities that claimed little would pay the same premiums as those that claimed a lot.

"Now they have a stratified premium category, and if you're a bad guy, you're going to pay for it.

"If you're a good guy, you'll get rewarded for it.

"In effect, the communities will be policing themselves."