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Published: 18 May 2018
Author: Penny Savidis

State Government Insurer passes buck on redress

The official insurer for the Victorian State government and a number of non-government agencies and religious institutions, has revealed it will not cover redress payments made under the child sexual abuse redress scheme. (Insurer refuses to fund abuse redress payments).

The decision by Victorian Managed Insurance Authority (VMIA), has angered abuse survivors and threatens to derail the Federal Government’s National Redress Scheme.  

The Commonwealth-led redress scheme is due to commence on 1 July this year if legislation is passed by then, although to date the Victorian, NSW, ACT, Northern Territory and Queensland governments are the only institutions who have opted in to the scheme

The VMIA is arguing that because monetary payments under redress will not be “compensation”, it is not obliged to cover redress payments. This means that the Victorian State government, and other entities VMIA insures, will have to foot the bill for redress payment themselves.

A legal loophole to avoid responsibilities

Unfortunately, it is not uncommon for insurers to rely on legal loopholes and technicalities to avoid paying out insurance claims in general. However, it is particularly disappointing in the arena of child sexual abuse, where survivors deserve recognition for the harm suffered. The Catholic Church and its insurer have previously relied on the so-called Ellis defence to fend of claims of historical child sexual abuse. VMIA’s position is a continuation of this pattern, relying on technicalities to deny justice to abuse survivors. It is high time institutions and their insurers started considering the needs of survivors instead of covering their own backs.

VMIA is the most common insurer RCT deals with in claims we currently settle outside of court. We have not experienced the same technical arguments being raised by VMIA in that context, even though payments made out of court are also not technically “compensation”.

VMIA’s stance may also have the unintended consequence of ushering survivors into alternative avenues to redress that may be more expensive for it in the long term. For example, survivors may instead elect to bypass redress and issue claims in court instead, which could expose VMIA to higher payments.

Decision sets dangerous precedent for non-government agencies

Of particular concern are the possible flow on consequences for non-government organisations insured by VMIA and other institutions that have not yet opted into the redress scheme. The decision by VMIA sets a dangerous precedent.

Many other institutions it insures lack the same resources as the Victorian State government, and may decide it is not financially viable for them to opt into redress if they have to foot the bill alone. And if other insurers adopt similar avoidant strategies, other institutions may elect not to opt in to the redress scheme because it would put financial pressure on them to fund redress themselves and would leave them effectively uninsured.

We are facing an increasingly messy environment in the lead up to redress, leading to uncertainty for abuse survivors about where they stand come 1 July.

It is time for institutions to put the suffering inflicted on survivors ahead of their own self-interest.

Penny Savidis was on ABC radio Ballarat with Steve Martin this morning discussing the above issues.

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