Insurers Agree to Pay $177M Into Buffalo Diocese Child Victim Compensation Fund
The Diocese of Buffalo, New York, has reached a settlement in which insurers will contribute $177 million to a fund to compensate victims of clergy sexual abuse.
The insurers’ contribution is in addition to the diocese’s $150 million, bringing the victims’ fund to a total of $327 million.
The diocese has asked the judge in federal Bankruptcy Court for the Western District of New York to approve the settlement.
The diocese and more than 20 insurers including Continental, Employers and National Union have engaged in negotiations through mediation since the diocese filed Chapter 11 six years ago in order to reorganize its financial affairs to address abuse claims.
The abuse claims followed New York’s enactment in 2019 of the Child Victims Act, a law that modified the state’s statute of limitations and created what was initially a one-year “window” during which victims of child sex abuse could bring previously time-barred civil actions. The legislation was subsequently amended to extend the window for a second year through August 13, 2021.
The diocese is facing more than 920 claims seeking damages for alleged negligence in connection with alleged acts of child sexual abuse.
The insurance policies at issue relate to a shared insurance program that provided primary and excess occurrence-coverage for the main diocese and as well as parishes, schools and other parties beginning in 1973. The diocese also held umbrella and/or excess liability policies.
In addition, the diocese and its related parties maintain they also purchased additional liability policies before 1973 that provide coverage. However, copies of most of the earlier policies cannot be found.
Insurers have asserted numerous coverage defenses and they have questioned whether the diocese is liable and whether Insurers have any responsibility under any policy.
The diocese and the committee representing survivors have disputed the legal and factual basis for many of the defenses asserted by the insurers.
The diocese said that one of the reasons it moved to settle is because it believes that insurers will dispute that the additional policies were ever issued, or if they were, the diocese was not entitled to coverage under them. Because most of these are missing, the diocese would have to rely on secondary evidence to prove they were issued.
Another reason came after it determined that a “material number” of the claims it faces allege what the insurers are “likely to assert would be, from either an insurance recovery and/or legal liability perspective, low- or no-value claims.”
In the end, the diocese concluded that the settlement amounts offered by the insurers, and the certainty of recovery of these funds, provided fair value for the release of claims against the insurers, outweighing the cost, delay, and litigation uncertainty of continued prosecution of the insurance coverage issues.
The settlement agreement is intended to completely resolve the insurance coverage issues.
The diocese noted that the committee representing survivors “played an integral role in the mediation and fully supports” the settlement.
The diocese’s more than 100 parishes are responsible for $80 million of the church’s $150 million contribution to the victims’ fund.
The total $176,955,500 from insurers is to be paid by the following insurers and their affiliates:
- Continental Insurance Co., $85,000,000
- Employers Insurance Co. of Wausau, $37,500,000
- Selective Insurance Co., $35,500,000
- Catholic Mutual Group, $9,000,000
- Paul Fire and Marine, $2,087,500
- National Catholic Risk Retention Group , $1,500,000
- Hartford Accident and Indemnity Co., $1,500,000
- Aetna Insurance (CIGNA), $1,500,000
- National Union Fire Insurance Co., $1,400,000
- And more than a dozen additional insureds for amounts from $500 to $300,000 each.