Compensation claim limitation periods can pose an obstacle to victims of institutional sexual abuse, but changing them could present challenges to insurers, according to the Insurance Council of Australia (ICA).

In a submission to the Royal Commission into Institutional Responses to Child Sexual Abuse, ICA argues against reforms.

It says retrospective removal or extension of limitation periods may adversely affect insurers of institutions.

The inquiry has received a number of submissions on the issue.

ICA says an insurer could be exposed to claims for which it has not collected sufficient premium.

A flood of claims following legislative change could also affect an insurer’s capital position.

“Given these implications, particularly in relation to possible pricing and prudential impacts on insurers, it is ICA’s position that careful consideration be given to the certainty these limitation periods provide, and the potential impact retrospective changes to limitation periods may have.”

In light of the high underwriting risk of institutions that work with children, some insurers in Australia have elected not to cover this segment, ICA says.

Coverage for sexual abuse by institution employees is typically excluded from standard liability policies, and is provided as an extra only.

The inquiry has also sought feedback on reforms to the duties of institutions, in particular expanding on the circumstances in which they can be found liable for child sexual abuse.

“This is likely to adversely affect the affordability and availability of liability insurance for these institutions,” ICA says.

It says reforms should focus on improved practices and risk management, to reduce the likelihood of abuse.