Care cover crisis NSW and other states are scrambling to find solutions after the last insurer dropped ‘uninsurable’ abuse cover By Miranda Maxwell
S
tate governments are racing to devise a longterm solution to an insurance sector collapse that has exposed care providers to significant financial and reputational risk, threatening their ability to offer essential services to vulnerable Australians.
The issue has arisen after Ansvar withdrew from offering providers of foster and residential housing programs – services known as out-of-home care – cover for claims of physical and sexual abuse (PSA). PSA insurance enables providers to deliver essential services to vulnerable children, people with disabilities, the disadvantaged, the aged and other groups. Ansvar’s withdrawal from out-of-home PSA cover follows the departure of almost all other insurers from the space after the Royal Commission into Child Sexual Abuse reported in 2017. The niche has been deemed uninsurable by underwriters after a surge in historical claims, egged on by advertising from no-win no-pay lawyers, and has left care providers pleading for state governments to step in and devise a backstop. A short-term emergency tide-over indemnity scheme has been introduced in New South Wales as a quick fix, and other states – apart from Victoria, which has a had a “generous” scheme in operation for the past two decades – are expected to follow suit after extensive lobbying by concerned organisations such as such as Anglican Insurance & Risk Services (AIRS). An intergovernmental working group has been established to identify a long-term solution, which NSW hopes will be in place by December when its Short-Term Indemnity Scheme stopgap measure expires. That scheme only covers claims related to abuse after mid 2017, limited to $5 million. Child Protection figures reveal around 1% of children aged under 18, or just over 45,800 children, are in outof-home care. Around half are in “kinship care” with
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