The latest meeting of the Insurance Council of Australia (ICA) Business Advisory Council focused on a crisis in the availability of physical and sexual abuse liability insurance coverage for out-of-home care providers.

It comes after the last private insurers offering this cover withdrew their products last year in the face of a surge in claims with no liability limitation, leaving providers of foster and residential home care to lobby state governments to step in and offer a backstop.

“It was identified at the meeting that the drivers of the severe tightening of this insurance market were the significant increase in the quantum of common law claims for physical and sexual abuse in recent years, more robust risk mitigation requirements of reinsurers and insurers, and changes to liability settings, such as the removal of limitation periods, which put insurers on risk indefinitely for occurrence-based policies,” an ICA spokeswoman told insuranceNEWS.com.au of the February 22 meeting.

Some state governments, such as NSW, have implemented interim insurance coverage arrangements for out-of-home care providers.

An intergovernmental working group, co-chaired by the NSW Department of Communities and Justice, has also been established to identify a long-term solution.

The Business Advisory Council includes representatives from business and the insurance industry and was formed in response to recommendations from a strategic review undertaken for the ICA by industry expert John Trowbridge. It is chaired by former National Insurance Brokers Association (NIBA) CEO Dallas Booth.

The ICA says insurers are looking forward to engaging with the intergovernmental working group.

“The forum is an important part of managing our relationship with our small and medium business cohorts and is attended by a range of stakeholders who are engaged on very difficult and complex areas like this one,” it said.

See Analysis.