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Allianz unit forced to pay archdiocese sex abuse settlement


A federal judge in New Haven, Connecticut, has awarded nearly $1 million to the Roman Catholic Archdiocese of Hartford, Connecticut, after Chicago-based Interstate Fire & Casualty failed to reimburse the archdiocese for payments the Archdiocese made to settle sexual misconduct cases.

Judge Janet Bond Arterton found “evidence of unreasonable delay” in Interstate's handling of claims involving priests and minors.

Interstate Fire & Casualty Company is a wholly owned subsidiary of Fireman's Fund Insurance Co., which, in turn, is a wholly owned subsidiary of Allianz Global Risks U.S. Insurance Co., which declined to comment upon the ruling.

The archdiocese had purchased excessive indemnity policies from Interstate between 1978 and 1985 as part of its participation in the so-called “Bishop's Plan,” which was brokered by Arthur J. Gallagher & Co., later Gallagher Bassett Insurance Service, the archdiocese's third-party insurance administrator.

Under the policies, Interstate had agreed to indemnify the archdiocese “for all sums” that it was obligated to pay “arising out of any occurrence or happening during the period of insurance.”

Between August 2010 and May 2012, the archdiocese settled four claims by individuals who alleged they had been sexually abused by three priests when they were children between 1977 and 1984 or 1985.

The court ruled that the archdiocese's settlements with the victims were reasonable.

In interpreting the meaning of “occurrence,” the court ruled that Interstate was obligated to indemnify the archdiocese for all sums paid arising out of the archdiocese's placement of the accused priests in environments where they had the opportunity to abuse children if the archdiocese did not subjectively know that it was substantially probable that the priests would abuse children.

In a 2008 reservation of rights letter to the archdiocese, Interstate maintained that “the intentional infliction of physical and/or emotional injury falls outside the scope of coverage under the definition of occurrence.”

Interstate also claimed that the archdiocese was not entitled to any damages because the misconduct alleged by the claimants against the archdiocese is “derivative of and inextricably intertwined with” the intentional conduct of the offending priests.

The court awarded the archdiocese $945,265 plus interest. A spokesperson for the Roman Catholic Archdiocese of Hartford did not return a call seeking comment.