While I don't know the facts it doesn't seem unreasonable to me that the police has never killed anyone in Iceland. It's a small and peaceful country.

I'm from Denmark, which is culturally fairly close to Iceland and we still talk about the riot in 1993 where the police fired 111 shots in the most violent encounter with rioters since the second world war (noone was killed or seriously injured). We're a country of 5 million and we have less than one person a year that gets shot to death by the police. In Norway they're right now discussing whether the police should even be allowed to carry weapons.

If you're American I can understand your disbelief, since it's an extremely violent country, but as a scandinavian it seems quite believable.