The Independent Inquiry into Child Sexual Abuse recently published their first interim report, providing an overview of the Inquiry's work and highlighting emerging key themes.
The Inquiry has so far held five public hearings, a series of seminars and published two investigation reports.
The Inquiry Chair, Professor Alexis Jay, anticipates the Inquiry will have made substantial progress by 2020, with a further eight public hearings to be heard within the next 12 months.
The Interim Report lists 18 recommendations to be implemented by the Government, police and other institutions to better protect children from sexual abuse. Of these recommendations, two are of primary importance to insurers:
1. Public Liability Register
The Association of British Insurers has been asked to consider whether a register of public liability insurers could be introduced to assist claimants in child sexual abuse cases in locating the insurers. This is expected to operate in much the same way as the Employers Liability Tracing Office.
2. Redress scheme
The Government has been tasked with setting up a financial redress scheme for survivors of the Child Migrant Programme, where 130,000 British children were forcibly deported into domestic and labour servitude in Australia and other Commonwealth countries by the UK Government, and leading churches and charities from 1947 to the 1970s.
This government-enforced trafficking was bigger in scale, geographical spread, and went undetected for longer than perhaps any other institutional abuse to date.
The IICSA's recent report noted that the post war child migration was a "fundamentally flawed policy" and the Government "failed to ensure that there were in place sufficient measures to protect children from sexual abuse (as well as other forms of abuse and neglect)."
The IICSA panel called on the Government to establish a redress scheme without delay, with payments to be made within the next 12 months to provide an equal award to every applicant, as it concluded all were exposed to the risk of sexual abuse. In Australia, victims from the school in Molong won a settlement from the state and federal governments of more than $20m in 2015, but this is the first step in the UK's compensatory response to the abuse.
As this example highlights, whilst it is not part of the Inquiry's function to determine civil or criminal liability of named individuals or organisations, the Inquiry may still reach findings of fact relevant to its terms of reference. As further recommendations are released, they are likely to serve as a trigger for insurers with potential exposure to carefully review their policies and consider the impact the findings could have on their capital and reserving position.
Insurers may find they are also expected to be active participants in the Inquiry process. Similar inquiries in Australia required insurers to give evidence and in some instances provide their files to the Inquiry. Evidence that Local Authorities may have allowed their fear of losing insurance cover to have influenced their approach to handling and investigating child abuse for example is likely to be considered.
There have also been reports of cases where insurers attempted to suppress information about abuse allegations. If such allegations are raised before the Inquiry, it is anticipated that evidence will be required from insurers and Local Authorities on these issues.
Whilst the Interim Report does not discuss the Limitation Act 1980, it acknowledges the Act is deemed by many as an obstacle to accessing justice for victims and survivors. The operation of the Act in child sexual abuse cases will be considered further by the Inquiry, particularly given that Scotland has recently legislated to remove the statutory time bar for cases in which the claimant was under 18 at the time of the abuse.
Mandatory reporting obligations
The Inquiry will hold a seminar on 27 September 2018 to consider whether mandatory reporting should be introduced into the UK. This was previously the subject of a consultation in 2016.
The introduction of a reporting obligation would mean certain businesses and professionals would have a duty to act and take appropriate action where there is reasonable cause to suspect abuse is (or has been) taking place. Civil claims for breaching such obligations are likely to be the natural consequence of these increased duties.
The consultation proposed only certain professionals are likely to be mandated to report. Exemptions may include the clergy and those voluntarily working with children such as scout leaders or military personnel in charge of cadet forces. Given the historic prevalence of institutional abuse in these areas, the Inquiry may consider broadening the scope of the duty to include them.
Impact of the Inquiry
The Inquiry could potentially have both direct and indirect consequences for insureds and insurers alike. Given the scope and the political sensitivity connected with the Inquiry it appears that a comprehensive investigation will follow. Both criminal and civil claims are likely to result in adverse media attention. Whilst this is likely to focus on the perpetrator, where civil claims are defended, insurers may well be exposed to negative press coverage.
In the shorter term, insurers will begin to see claims for compensation from victims who may not be willing to wait until the end of the Inquiry. Indeed, recent and continuing developments have created a favourable claims environment in which to bring claims, as evidential and procedural rules have been relaxed in order to ensure victims do not go uncompensated.
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