Legal experts say sex abuse insurance lawsuit could have far-reaching consequences

Legal experts say sex abuse insurance lawsuit could have far-reaching consequences | Insurance Business

Legal experts say sex abuse insurance lawsuit could have far-reaching consequences

Experts believe that the result of a legal battle between a major insurer and an Ontario Catholic diocese could have further consequences and implications for similar cases in the near future.

In 2008, the Catholic Diocese of London filed a lawsuit against AXA Insurance Canada claiming a breach of policy when the company refused to pay for claims related to settlements between the religious organization and the sexual abuse victims of two priests associated with the church.

The church maintained that it had liability insurance in the 1960s and early 1970s, when the alleged abuse took place, which meant it was entitled to coverage from AXA.

In its statement of defense, AXA said that the diocese’s policy is void because church officials not only knew of the sexual abuse accusations against one of their priests before the insurance policy was enacted, but also failed to disclose such information to the insurer. The insurer is additionally demanding the church return the $10 million it had paid out under the insurance policy.

Legal experts believe that if AXA wins the case, it could set off a chain reaction.

“If the insurer is successful, you’re going to see every single insurance company in Canada filing similar suits,” lawyer John McKiggan told The Canadian Press.

McKiggan, unaffiliated with the AXA – Diocese of London case, secured a $13 million settlement from the Catholic Diocese of Antigonish, Nova Scotia, for victims of sexual assault in 2009.

“If I was running an institution like the Catholic Church or a residential institution, I would be concerned because there is rarely a case where at least the allegation isn’t made that persons in authority knew what was going on,” he prefaced.

McKiggan also pointed out that there have been multiple similar lawsuits across the country since.

Susan Vella, a lawyer specializing in sexual assault cases, said that there could be “huge ramifications” if insurers can easily decline institutions coverage, either for sexual abuse settlements or court-ordered damages.

Vella explained that should AXA win the case, institutions moving forward would be more likely to be held liable to pay victims themselves. Paying victims might require these institutions to sell property.

She also added that, if they are desperate enough, religious institutions might also choose to fight victims in court rather than make large settlements.

“It’s going to require victims to perhaps go to trial and perhaps be re-traumatized through that process,” Vella said.


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