Insurance cover a good-value decision
INDEMNITY:A DECISION by the Archdiocese of Dublin to obtain insurance to protect itself from exposure to claims arising from allegations of child sex abuse by its priests proved to be extraordinarily good value, the Dublin diocesan report says.
The policy eventually resulted in the archdiocese, and other dioceses which later signed up, receiving about €12.9 million by way of indemnity in return for premiums of only €50,800.
The decision to take out insurance was made in 1987. The timing is described as “significant” in the report, as the archdiocese then realised that child sex abuse was a serious problem.
Church General, which provided general cover to parishes, was approached on behalf of the archdiocese in 1987 and was told the idea followed a visit to the US by Archbishop Kevin McNamara, who had learned of difficulties experienced by a diocese there following allegations. The report says this was not the case and the move was prompted by events “much closer to home”, as the archdiocese knew of about 20 priests against whom allegations of child sex abuse had been made, or about whom there was suspicion.
A special policy was agreed in 1987, but a former Church General manager told the commission no proposal form or questionnaire was completed before the policy commenced, and that no risk assessment was undertaken of the financial exposure the company could face as a result of claims.
The indemnity was provided by Church General on the basis of claims made or notified during the period of cover. The commission heard this was the first time the company had written a policy on such a basis. The premium was £515, with a limit of £200,000 for all claims during the period of cover.
Church General made the special policy available to other dioceses in 1989 and all but one joined the scheme. No renewal notices were issued in respect of the special policy after 1990 and no further premiums were paid.
By 1994, Church General was concerned about its exposure arising from civil claims against dioceses alleging child abuse by priests and it tried to introduce a restricted policy. This lead to a new agreement in 1996 providing for the establishment of a central fund to cater for abuse claims. The insurer agreed to pay £3.4 million into the fund to cover claims arising from abuses prior to 1996.
In 2000, Church General agreed to pay a substantial amount of abuse claim costs, on the condition it retained 50 per cent of the Catholic Church’s general insurance business. The commission was told the insurer was resigned to losing as much as £19 million as soon as the 2000 agreement was made. Church General said the money had been set aside and it was a commercial decision to extend the indemnity, because of the overall value of the church’s business.