Author: Paula Raudino


Sexual abuse coverage

There has been intense public and regulatory scrutiny related to sexual harassment and abuse, through the Me Too movement, Australia's National Redress Scheme as well as the several Australian Royal Commissions, including Aged Care Quality and Safety; Institutional Responses to Child Sexual Abuse; and Violence, Abuse, Neglect and Exploitation of People with Disability.

Over the past 12 to 24 months, the market has been experiencing an increase in claims volumes and payouts from historical sexual abuse incidents. These claims have predominantly been driven by court judgements arising from the preference for civil litigation rather than settling via the National Redress Scheme.

Some insurers in the market have made the decision to exit this space entirely, which has been driven by a significant deterioration in their abuse-exposed portfolios. In the past 6 to 12 months, insurers have not only seen a significant uptick in frequency of claims, but also an escalation in claims costs (legal and payout costs). Greater focus from plaintiff lawyers on future economic loss elements of claims has caused significant claims inflation, which has added directly onto the costs of these claims.

Insurers in this sector are predicting this environment to become even more challenging in the future, which is causing them great concern, given there has been an increase of civil litigation vs the usage of the redress scheme.

Some insurers who have historically been able to provide a level of abuse coverage are also retracting from the market. These include those insurers that have provided coverage for independent school schemes.

General liability market update

Likewise with the sexual abuse market, the general liability market is also experiencing unprecedented times. Over the past 24 months, we have seen insurers increasing liability rates, limiting capacity and reviewing coverage closely following a deterioration in profitability and as higher reinsurance costs impact the market. Insurers are also applying restrictions on coverage via COVID-19-related exclusions.


The information contained herein is offered as insurance Industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client-specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have in place or that may be generally available. General insurance descriptions contained herein do not include complete Insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.

Insurance brokerage and related services to be provided by Arthur J. Gallagher Risk Management Services, Inc. (License No. 0D69293) and/or its affiliate Arthur J. Gallagher & Co. Insurance Brokers of California, Inc. (License No. 0726293).