The National Redress Scheme (NRS) affects many institutions involving children and, since its formation in 2018, over 70,000 cases have been lodged across industries ranging from childcare to health services. This content reviews the scope of the NRS, provides liability insights and examines the implications of redress claims from an insurance market and policy perspective.
The role of the National Redress Scheme: A brief overview
Created in response to the Royal Commission into Institutional Responses to Child Sexual Abuse1, the NRS acknowledges the harm and impact on survivors and ensures that institutions take responsibility.
Established in 2018, the NRS provides support mechanisms for people who experienced child sexual abuse in Australian institutional settings, such as schools, churches, sports clubs and foster care. Through the Scheme, eligible survivors can access counselling, a direct personal response from the institution and redress payment. The Scheme runs until 30 June 2028.
- Under its terms, survivors must choose between accepting a redress payment or pursuing a potentially larger settlement through litigation, as they cannot legally do both.
- For organisations, it is a means of paying compensation to survivors of institutional abuse when the survivor has chosen to avoid legal action.
How redress payments work and who is liable for financial claims
Under the NRS, once a claim is verified, the nominated institution is responsible for the redress payment. Payment amounts are assessed individually and range from less than $10,000 up to $150,000, depending on the severity of the abuse and any previous related payments a survivor may have received.
Importantly, organisations do not make decisions about redress applications and cannot contact survivors directly. All assessments and communications are managed independently through the NRS.
Organisations subject to the National Redress Scheme
Many institutions have joined the NRS, including Commonwealth and all state and territory governments as well as many of the major churches and charities. All relevant organisations are encouraged to join the Scheme to ensure that redress can be provided to people who experienced child sexual abuse while in the care of their institution.
The Scheme has been designed to cover any institution where child sexual abuse has taken place, including:
- Churches, religious orders and missions (including mosques, temples and synagogues)
- Schools (government, private and catholic schools)
- Orphanages and children's homes
- Foster care agencies
- Detention centres and juvenile justice centres
- Hospitals and health services (including psychiatric hospitals)
- Welfare services and community services
- Youth centres, scouts and sporting clubs
- Childcare centres, nurseries and preschools
The National Redress Scheme for Institutional Child Sexual Abuse Declaration 2018 (the Declaration) is an official list of all participating institutions2.
How the National Redress Scheme has expanded over time
The NRS has been updated to strengthen access and improve outcomes for survivors. Following a 2021 review, which recommended considerable improvements, new legislation passed in March 2024 to enhance the Scheme's fairness and availability to survivors.
A key change expanded eligibility — survivors who are currently incarcerated can now apply for redress, with exclusions applying to those serving longer sentences for serious offences.
Other updates included:
- Allowing the NRS to share information about institutions that have not joined
- Enabling previous redress applications to be reassessed if an institution later joins the Scheme
- Reducing the eligibility criteria for when a 'special assessment process' is required
The scale of NRS cases
Are redress payments covered by an organisation's insurance policies?
Redress payments under the NRS occupy a complex area when it comes to insurance. Typically, public liability (PL) policies apply to an institution's legal liability for personal injury, including abuse‑related claims (where cover for sexual abuse has not been excluded by the insurer).
Other insurance policies, such as directors' and officers' liability, medical malpractice, professional indemnity and statutory liability, commonly exclude abuse or molestation risks, directing these exposures back to PL cover.
When the NRS was first introduced, redress payments were viewed as 'recognition' payments rather than compensation, creating uncertainty around insurability. Subsequent legislation clarified this position. While redress payments are not treated as compensation for the purposes of social security or similar entitlements, legislation expressly allows liability insurance contracts to classify redress payments as compensation if the terms of the policy support it.
Key challenges for policyholders seeking to recover redress payments
Organisations seeking to recover redress payments through insurance claims may face several practical hurdles.
1. Claims conditions
NRS assessments are conducted independently, without insurer involvement. As many policies require insurers to control or approve the defence and settlement of claims, an insurer may decline reimbursement if these conditions are not met.
2. Burden of proof
The NRS uses a lower threshold of 'reasonable likelihood' that the abuse occurred, while PL policies respond to an organisation's legal liability, usually assessed on the 'balance of probabilities', which is harder to prove. This mismatch can create uncertainty about whether an insurer is obliged to indemnify the organisation.
3. Historic policy challenges
Many claims relate to abuse that occurred decades ago. Locating old policy details, insurer details or coverage terms can be difficult or impossible. In some cases, insurers no longer exist or may interpret historic intent narrowly, making recovery unlikely.
4. Coverage limitations
Even when sexual abuse coverage has been purchased more recently, it often includes higher deductibles, sub‑limits, restricted coverage (e.g., defence costs only) or retroactive date limitations, all of which may preclude redress payments from being covered.
5. Confidentiality constraints
NRS documentation is confidential and released only with survivor consent. Limited access to detail can hinder insurers' ability to assess the claim, increasing the likelihood of non‑reimbursement.
Accessibility of insurance cover and premiums related to NRS redress
Although it was initially anticipated that insurers might broaden or refine policy wordings to clarify whether redress payments could be included, this has not occurred in practice. Instead, the market has seen a significant withdrawal of sexual abuse coverage altogether.
This trend is not driven by the NRS alone but by a combination of factors, including:
- A substantial increase in abuse‑related claims following the 2013 Royal Commission1
- Global tightening of underwriting standards
- The removal of statutory time limits for lodging abuse claims
- The withdrawal of major insurers, such as Catholic Church Insurance (CCI), reducing overall market capacity
With fewer insurers willing to provide this type of cover, the remaining markets are selective and highly cautious. Where cover is offered, it is typically granted only after a detailed assessment of an organisation's historical claims record, governance culture and risk management practices.
Effects on premiums for organisations registering with NRS
- Higher claim frequency and severity
- Increased legal costs and inflation
- Underwriters factoring in 'long‑tail' liabilities and elevated future settlement expectations
Balancing redress costs and civil liability exposure
Before the NRS, survivors seeking financial compensation had only one pathway — a civil liability claim. These claims often resulted in substantial settlements under organisations' public liability (PL) insurance, but required survivors to undergo lengthy, costly and often re‑traumatising processes.
Initially, some institutions viewed the NRS as a potentially lower-cost alternative to civil claims. However, survivors have been advised that civil litigation may yield higher compensation, particularly where economic loss can be proved, which the NRS does not cover. As a result, survivors with strong or well-documented cases may opt for the civil pathway.
In theory, institutions participating in the NRS could reduce the number of high‑value civil claims by providing an easier, less confrontational option for survivors. On an individual case basis, the NRS may cost institutions less than civil litigation.
However, broader systemic factors have increased overall claim volumes. Public visibility from the Royal Commission, extensive media coverage, the 2024 legislative changes and the emergence of 'claim farming,' where individuals in high-risk environments are actively encouraged to lodge claims have all contributed to more survivors coming forward. This means that even if NRS payments are lower per case, the total number of claims may rise, increasing the overall institutional costs.
What Gallagher has observed among clients
- Civil claims continue to be lodged under public liability (PL) policies
- Redress claims proceed in parallel for survivors unwilling to undertake legal action
Risk management for institutions facing historical abuse claims
Understanding the landscape of NRS and redress claims, insurance policy conditions and coverage limitations, while having strong processes in place to respond to cases that arise, is recommended.
As of late 2025, Gallagher has seen very few redress payment reimbursement claims approved by insurers, mainly due to significant challenges in linking redress payments to existing policy wording, terms and conditions.
Gallagher's insurance and risk broking experts work with organisations and institutions across many sectors related to this Scheme, from healthcare to disability to sports clubs and education providers, and can provide support, advice, insight and expertise across the diverse range of risks involved.
February 2026
Expert contributor:
Natasha BarkerAccount Director | Health & Care Practice Leader