(AUSTRALIA)
The Australian [Surry Hills, Australia]
May 5, 2023
By John Ferguson
The Catholic Church’s insurer is considering winding down its operations unless another substantial bailout is made by dioceses and religious orders to plug the hole caused by sex abuse cases.
Catholic Church Insurance is discussing closing its new and renewal general insurance business amid a continuing surge in abuse claims as well as the liability impacts of factors such as Australia’s erratic weather.
The church hierarchy has been told the capital injection is needed about 18 months after shareholders pumped $170m into CCI to help cover sex abuse claims, amid significant losses.
The church has assured that sex abuse payments will not be affected by the insurer’s challenges.
Its shareholders include the dioceses across Australia and any decision to wind down its operations would affect hundreds of entities. The church hierarchy has about a fortnight to decide on another bailout.
Steps are under way to reassure victims of abuse that any compensation will be covered, with claims under the national redress scheme already met outside CCI’s operating framework.
CCI chairwoman Joan Fitzpatrick acknowledged the organisation was working to decide how to proceed but also confirmed there could be a wind-down phase for the organisation.
CCI was discussing with shareholders the close of new and renewal general insurance business in the absence of a significant injection of additional capital.
“Our shareholders have already made a significant contribution to the equity of the organisation in recent times, and we expect to know very soon how we will proceed,” Ms Fitzpatrick said.
“If CCI is unable to raise the required capital it will continue to operate for some years while current assets are used to fund operations, settle all known insurance claims, and any new claims that are made against existing policies which remain in force.
“CCI is solvent at this time and able to pay staff, suppliers and claims, and without additional capital is in a position to be right sized in an orderly fashion for the many years it would take to resolve all known and as yet unknown claims.’’
The Australian revealed in 2021 that dioceses and religious orders across Australia had moved to shore up CCI, which recorded a $192m loss in 2020-21 and lost nearly $250m the previous financial year. At the time, 18 CCI shareholders had injected capital into the company to strengthen its ability to compensate victims for abuse carried out by priests, religious and lay people.
Sex abuse remains the dominant issue for the church insurer but there have also been payouts for climate-related issues affecting customers. It was generally assumed that, as the abuse crisis was dealt with, high rates of insurance payouts may start to subside.
However, insurance experts said issues such as aggressive pursuit of claims by lawyers had also added to the payout burden.
Hundreds of cases of alleged Catholic abuse were referred to police after the sex abuse royal commission, with the church dominating total case numbers compared with other religions.
Australian Catholic Bishops Conference president Archbishop Timothy Costelloe said the church wanted to assure the Catholic and wider community that it remained committed to continuing to engage with survivors of abuse to meet all its legal obligations.
“The bishops and the leaders of religious institutes have been working for many years to ensure abuse claims are handled fairly, whether cases are covered by insurance policies or not. This will continue to be the case,” he said.