Insurance Companies and Redress for Sexual Abuse


Further allegations of unethical actions by insurance companies in regard to child sexual abuse were aired by the BBC on 24 February 2015. More details here.


What is the role of insurance companies in dealing with allegations of sexual assault of children? Is it right and proper that they be involved at all?

The matter arises again in both Australia at the Royal Commission into Child Sexual Abuse and in the UK where startling allegations of improper practices have been raised.

In the UK, Tim Hulbert, a retired head of social services in Bedfordshire, alleges that insurance companies tried to suppress information about child sex abuse in council care homes (The Telegraph (London) 14 January 2015).

Hulbert said he was instructed by the county council’s insurers not to admit liability or apologise to victims involved in a sex abuse investigation. He said he believed his experience had not been an isolated incident.

Mr Hulbert said: “Some insurers sought to suppress facts and justice for vulnerable young people in order to protect their own commercial interests. Put simply, out of greed. I find this approach immoral and obscene and I think it’s actually a part of the abuse that had been allowed to exist in this country.”

Hulbert declined to name the insurance company but said it was a household name and operated internationally.

Meanwhile, the Australian Royal Commission into Child Sexual Abuse is hearing a different perspective. Evidence has been put to the Commission that one of the major barriers to litigation by victims/survivors is the lack of assets held by church and other organisations. This can be remedied, it is claimed, by mandating all organisations dealing with children to insure themselves.

(An aside: the other side of the coin is the use of church property trust laws that make it almost impossible for churches to be sued.)

Is Insurance the answer?

The Victorian Parliamentary Inquiry into Child Sexual Abuse (Betrayal of Trust, 2013) found disturbing evidence of insurance company interference in the handling of claims. For example, in settlement negotiations under the Catholic Church’s Towards Healing policy – the so-called facilitation process – many claimants were shocked to find that the Catholic Church was represented not only by its lawyers but also by its insurers.

“Victims were not necessarily aware of an insurer’s involvement until they attended facilitation. Consequently, the exact nature of an insurer’s involvement was unknown to the victim until this point, or if the insurer organised a psychiatric assessment of the victim” (Betrayal of Trust, Vol. 2: 256).

The Parliamentary Inquiry found large discrepancies in the amounts paid to claimants depending on whether insurers were present in the process.

The average settlement was $32,817 when Catholic Church Insurances were known to be involved,  but $60,424  when they were not involved. (Betrayal of Trust, Vol. 2: 619.)

There are even wider discrepancies in payouts when the Church and claimants are both represented by lawyers as compared to payouts to claimants who are not represented by a lawyer. In many cases, the claimant has had to counter arguments put on behalf of the Church by both lawyers and insurers.

Putting the best face on it, insurance companies have an interest in contributing to the way organisations they insure effectively minimise and manage risk. They could advise on prevention strategies: child safe practices, staff selection and training, accountability and reporting measures, and the like.

However, the Victorian Parliamentary Committee commented that organisations that implement risk management processes only with the motivation of reducing their insurance premiums “ultimately prioritise their financial and legal concerns over their moral responsibility to protect children from criminal child abuseBetrayal of Trust, Vol. 2: 257).

Barnardos Australia is one agency with a clear position on the role of insurance companies: they should not be involved at all with the process of determining guilt or levels of compensation. (More)

Actuaries put out an alert to insurers

While the Royal Commission on child sexual abuse has no powers to award redress or compensation (but its recommendations are likely to go in that direction), actuaries are warning that its findings may result in churches, governments, charitable organisations – and their insurers – paying increased financial compensation and care and support costs to victims/survivors into the future.

According to Sharanjit Paddam, editor of Actuaries: The Magazine of the Actuaries Institute, October 2014, Issue 194, here) the Royal Commission could lead to substantial liabilities for insurers who have insured institutions in the last forty years.

This will, in part, be a result of heightened awareness of victims’ rights and a radical shift in the rules governing litigation and compensation schemes. The increases will apply not only to historical claims of abuse but to all future claims.

A more detailed paper on the issue was presented by Sharanjit Paddam to the Actuaries Institute General Insurance Seminar in Sydney in November 2014, (‘The Royal Commission into Institutional Responses to Child Sexual Abuse – Implications for Insurers’, here)

The message out of all this?

Churches and other institutions, increasingly being held to account for the crimes of their employees and their own dereliction of duty of care for vulnerable children, are beginning to worry about the financial pain they will suffer in the future.

Will this result in a net gain for victims and survivors – or will the lawyers and insurers simply get smarter on behalf of their clients, the churches and other institutions?


2 thoughts on “Insurance Companies and Redress for Sexual Abuse”

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