Insurance costs could rise after Lords abuse ruling

By David Ainsworth, Third Sector, 30 April 2008

Lords: senior judges examined six new appeals

Care charities have been warned that they could face spiralling insurance costs after a high-profile House of Lords ruling extended the time in which victims of abuse can make claims for compensation.

Before the ruling, victims of physical or sexual abuse had only six years to make claims for compensation. But after examining six new appeals, five Law Lords made a unanimous decision to extend this, in effect, to an unlimited period.

The cases included one of sexual abuse against charity Catholic Care and another against rapist Iorworth Hoare, who was sued by one of his victims after he won the National Lottery.

Charity insurer Aon warned that care charities could now face previously unheard claims stretching back many years, particularly from people saying they suffered abuse as children by charity employees.

The insurer said premiums could rise as insurers began to worry about footing the bill for legal claims.

"The new legal environment means that more claims are likely and there may be more successful claimants," said Lindsay Gray, a senior underwriter for insurer Ecclesiastical, in a briefing note for Aon. "Defending claims will be more problematic and settlements will increase."

He said care charities could expect more scrutiny of their procedures to prevent abuse happening, and more records checks would be required.

However, he said well-run charities could still expect to pay reasonable premiums.

Care charities have been liable for offences by staff since 2001, even if they were not negligent in failing to prevent the abuse.

New users register here FREE for full access