The New South Wales government has been forced to provide taxpayer-funded indemnity to 47 non-government organisations, including church bodies, to cover child abuse claims, as states and territories scramble to respond to the widespread withdrawal of cover by the private insurance market.
Private insurers are now widely refusing to provide coverage for physical and sexual abuse to organisations working with vulnerable children in out-of-home care and youth homelessness services.
The decision by commercial insurers to abandon the field, described by one state minister as “market failure”, was caused by reforms removing time limits on civil abuse claims, which prompted a wave of new cases.
Governments fear that, without insurance, non-government organisations will simply cease providing critical care and homelessness services. That has prompted the urgent design of temporary indemnity schemes that allow governments to pay out child abuse complainants where an institution is unable to do so.
The situation threatens to leave taxpayers covering abuse claim payouts for church-linked bodies such as Anglicare, an arrangement that has angered survivor groups.
The Queensland, Tasmanian, West Australian and New South Wales governments have all confirmed to the Guardian that they have been forced to offer indemnity for child abuse to non-government organisations.
The NSW state government said it had struck indemnity deals with 47 providers of out-of-home care and youth homelessness services. Of those, five were faith-based organisations.
NSW set up its temporary indemnity scheme as states and territories work urgently for a more permanent solution.
The temporary scheme limits each provider to $5m, inclusive of costs such as defence costs, and is only available where organisations have been “unable to obtain insurance in the commercial market”.
The scheme also only covers abuse that has occurred since 30 June 2017.
“In the event the costs associated with one or all claims in the period exceed $5 million, the service provider will bear those costs above $5 million,” the scheme’s guidelines say.
A Department of Communities and Justice spokesperson said the scheme will end at the end of this year and is only designed as temporary cover for out-of-home care and youth homelessness providers.
“The scheme addresses the immediate risk to service delivery, while a sustainable long-term solution to the lack of insurance for PSA is identified and implemented,” the spokesperson said.
“The NSW government relies on our non-government sector partners to deliver crucial [out-of-home care] and youth homelessness services to vulnerable children, young people and their families.
“Obtaining insurance for PSA risks is a critical issue for OOHC and youth homelessness services in NSW, and nationally.”
Providers are made to pay a fee to join the indemnity scheme.
The WA government also confirmed it was “currently indemnifying impacted organisations within the out-of-home care and youth homelessness sector” until a longer-term solution can be found.
The Tasmanian government confirmed to the Guardian it has only indemnified one organisation for child abuse. Queensland has indemnified 18, including Anglicare Southern Queensland and four other church or faith-based groups.
States and territories have formed an inter-jurisdictional working group in an attempt to come up with a more feasible long-term solution.
“Community Services Ministers across Australia have established an Inter-Jurisdictional Working Group to identify a long-term solution for physical and sexual abuse (PSA) insurance for out-of-home care and youth homelessness providers,” a WA department of communities spokesperson said.
“In the interim, each jurisdiction is responsible for managing [physical and sexual abuse] insurance.”
Victoria is not affected by the problem because since the early 2000s it has offered a state-funded program of insurance for community service organisations, including those providing out-of-home care and youth homelessness support.
The indemnity schemes have prompted questions about the morality of allowing taxpayer-funded financial protection to institutions who have, in some cases, woeful records of allowing and covering up child abuse.
Last week, the Blue Knot Foundation’s president Cathy Kezelman said taxpayers would be right to be “concerned that their money is being used to enable a powerful institution to effectively abrogate its responsibilities”.
Queensland’s minister for children, Leanne Linard, said last week that the “market failure” in private insurance put critical services for vulnerable children at risk. She said it also risked leaving survivors without compensation.
“If claims are made that providers are unable to meet, people who have experienced physical and sexual abuse miss out,” she said.
“The market failure for physical and sexual abuse insurance for out-of-home care and youth homelessness services is a national issue and we are working with other states and territories on a range of options to achieve a longer-term solution.”
In Australia, children, young adults, parents and teachers can contact the Kids Helpline on 1800 55 1800, or Bravehearts on 1800 272 831, and adult survivors can contact Blue Knot Foundation on 1300 657 380. Other sources of help can be found at Child Helplines International
