With the announcement by Catholic Church Insurance (CCI) of its decision to enter run-off there will be many Catholic Church ministries who will have questions about their insurance coverage.
Church based ministries require very specific coverage for their activities and so with today’s announcement by CCI there will be some uncertainty about steps forward for Catholic Church ministries and others impacted by today’s decision.
Here are some of the key questions you might have as a Catholic ministry about the implications of CCI entering run-off.
Is CCI still operating? What does “run-off” mean?
CCI is continuing to operate in a run-off model, it has not entered into administration or gone insolvent at this time. This means that while its activities are winding down, CCI will still continue to operate using current capital.
Unlike insolvency, where the shutdown can sometimes be immediate, “run-off” in this case is a shutdown that occurs over time, allowing existing policyholders to remain covered and have time to find new coverage.
Will I continue to be covered by my existing CCI policy?
CCI has announced that it will cease writing new insurance business and renewing policies except in limited circumstances. So most organisations will no longer be able to have a policy provided by CCI once their policy expires. You will likely need to find a new insurer for your insurance needs, to supply you with a new policy.
Importantly, any new claims made against current policies which remain in-force will still be settled by CCI as it continues to operate in run-off mode (3). CCI remains solvent at this time and is able to pay staff, suppliers and claims.
My policy with CCI expires soon, how can I be covered?
In the short term, some CCI policy holders may find that their insurance policy is set to expire before they are able to source new coverage. To assist policyholders in this situation, CCI has offered to provide short-term renewals lasting until June 30. This should give policyholders time to source alternate insurance coverage.
What will happen with existing CCI claims?
CCI has stressed in its media statements that it is still able to fund existing claims and new claims made against existing policies. This is good news for claimants, who also have the assurance of the Catholic Church, specifically where the claim relates to sexual abuse, that their claims will be “handled fairly, whether cases are covered by insurance policies or not” (2).
The Australian Prudential Regulation Authority (APRA), Australia’s financial safety regulator, has confirmed that it will “continue to closely supervise CCI” (1). Its key concern being that the community can have confidence that CCI will continue to meet its prudential obligations. Specifically, an insurer such as CCI is required by APRA to have the financial means to pay all legitimate claims to their policyholders.
What support will be provided by the Catholic Church for Catholic ministries?
The Catholic Church has stated that it will be “working closely with all Catholic ministries currently affiliated with CCI to ensure continuity of general insurance cover” (2). The Catholic Church has a vested interest in ensuring that its community still has the coverage that it needs. Their statement makes it clear that they will be an avenue of support. How they will provide that support is yet to be detailed.
How can I find insurance for my Catholic Church ministry?
Given the specific insurance needs of Catholic Church ministries, an insurance broker with experience servicing religious and faith-based organisations is best placed to make sure you get the coverage you need.
(1) APRA. "APRA to monitor CCI following its decision to enter run-off". 30 May 2023. https://www.apra.gov.au/news-and-publications/apra-to-monitor-cci-following-its-decision-to-enter-run-off
(2) Costelloe, T and Jones, P. "Statement Regarding Catholic Church Insurance Ltd". Catholic Religious Australia, 5 May 2023. https://www.catholicreligious.org.au/media-releases/cp6nkihv4oozeh6u7rv8cr7nbzux0u
(3) Wood, Daniel. "Catholic Church Insurance refuses bailout, closes down". Insurance Business Magazine, 30 May 2023. https://www.insurancebusinessmag.com/au/news/breaking-news/catholic-church-insurance-refuses-bailout-closes-down-447497.aspx