Catholic Church Insurance is planning to enter a scheme of arrangement amid uncertainty over the quantum of historical sexual abuse and other claims, and to avoid formal insolvency. Source: The Australian.
CCI chair Joan Fitzpatrick has written to policy holders proposing a scheme of arrangement, which is a common procedure in global insurance markets amid uncertain future claims.
Ms Fitzpatrick said that it was possible that further claims could emerge that could endanger CCI’s solvency, “resulting in significant impacts on policy holders”.
A scheme of arrangement, she said, would seek to ensure that a formal insolvency process was avoided.
“Based on estimates of claims as at end of May 2023, CCI currently has sufficient assets to meet its liabilities as they fall due,’’ Ms Fitzpatrick writes.
“However, the claims situation is uncertain both in respect of Professional Standards (abuse claims) and other lines of business underwritten by CCI and is subject to significant complexity.
“CCI is therefore proposing a scheme as a prudent precaution to ensure a fair, equitable and managed regime would be implemented quickly for the benefit of policyholder creditors in the event CCI might otherwise become insolvent.’’
CCI is working with external advisers to formalise the process, but has been clear to policy-holders that the impact on customers – which include Catholic parishes, schools, hospitals and related entities – could be significant if claims costs blow out.
CCI has notified the insurance industry regulator and has been working for years to deal with the fallout of abuse claims.
The post-institutional abuse royal commission environment has led to some significant changes to the way that abuse claims are dealt with in different states, as well as subsequent court decisions that have paved the way for higher claims.
The Church has said that it will honour outstanding abuse claims, with Australian Catholic Bishops Conference president Archbishop Timothy Costelloe SDB and the other bishops aware of the challenges.
Catholic Church insurer’s insolvency battle amid abuse claims (By John Ferguson, The Australian)