The High Court of Australia’s recent judgment in AA v The Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle [2026] HCA 2 marks one of the most consequential developments in institutional liability in decades. More than a legal outcome, it is a signal, or arguably a warning, to all organisations responsible for children and vulnerable individuals. For the Catholic sector in particular, the decision lands at a time of structural transition, with the CCI Scheme of Arrangement approaching its 2027 run-off closure and the insurance market undergoing significant recalibration.
Understanding the intersections of these developments is essential for future planning.
A New Liability Landscape: Institutions Held Directly Responsible
In its February 2026 ruling, the High Court overturned long standing precedent and held that institutions may be liable for intentional criminal acts committed by their delegates under a non-delegable duty of care. This represents a profound expansion of direct institutional liability. The Court rejected the long held assumption that intentional abuse sits outside the scope of institutional responsibility. Instead, it confirmed that a non-delegable duty is a positive obligation: where an institution assumes responsibility for the safety of a vulnerable person, it must ensure reasonable care is actually taken, regardless of who performs the function or how unforeseeable the misconduct may be.
For religious institutions, the implications are obvious and far-reaching. The Court was clear that the duty is not a shield that only applies to negligent conduct, it applies to intentional abuse as well. As Wotton + Kearney observes on the day of judgment, the High Court delivered a “significant judgment expanding the principles of non-delegable duties and having wide-ranging impact for child abuse claims.” Clyde & Co goes further, positioning the ruling as a “new frontier for institutional liability” that will reshape the way historic cases are litigated.
From a risk perspective, the decision effectively increases exposure on both historic and future claims, potentially widening the window in which legal action may be viable and reducing institutions’ ability to defend matters based on scope of authority arguments.
The Approaching End of the CCI Scheme: Pressure Without a Safety Net
The timing of this decision is especially challenging. The Catholic Church Insurance (CCI) Scheme of Arrangement enters its final stages of run-off, scheduled to close in 2027. Once the run-off ends, Catholic institutions will lose the last vestiges of collective protection for legacy abuse liabilities.
While the High Court decision does not directly reference or affect the scheme, the environment it creates does. A broader liability standard amplifies uncertainty around claim frequency and quantum during the remaining run-off years. Entities carrying potentially dormant or incomplete historical exposures need to consider the real possibility of re-energised claims activity leading up to 2027, with the risk that some matters may fall outside the scheme’s protective window entirely.
The cessation of CCI’s run-off amplifies the sector’s reliance on commercial insurers who are themselves responding to the new legal landscape. This brings us to a critical market dynamic.
The Insurance Market: Consolidation, Long-Tail Exposure and Pricing Power
QBE – The Long-Tail Burden
QBE continues to provide Professional Standards (PS) cover to Catholic entities and carries exposure dating back more than four decades. The expanded liability standard heightens the uncertainty around these historical claims. The question looming over the sector is whether QBE’s reserving and funding mechanisms will sustain an environment where liability for historic intentional acts is more readily imposed. If historical losses escalate, insurers must absorb them somehow, often through increased premiums, higher deductibles, or stricter coverage conditions.
In this context, QBE’s pricing strategy becomes not just a commercial consideration but a systemic pressure factor for the whole Catholic market.
Beazley - A Clean Slate and Pricing Leverage
New entrants, particularly specialty insurers like Beazley, which has been acquired globally by Zurich, offer a different dynamic. With no historical Catholic liabilities, they underwrite purely based on current risk management frameworks. Yet the lack of competition enables these insurers to price policies at “QBE like” premium levels despite carrying far less risk.
Though Zurich has not indicated any intention to withdraw support, major acquisitions often lead to portfolio rationalisation and changes in underwriting appetite. Catholic organisations should be alert to potential shifts in capacity, conditions, or deductibles as Zurich integrates Beazley’s operations.
This combination, QBE with its rising long-tail exposure, and new entrants with pricing power, creates an unbalanced and potentially unsustainable market for abuse liability insurance.
What Happens if the Market Retreats? The Case for Alternative Risk Financing
If commercial insurance continues to evolve toward:
- extremely high premiums
- significant excesses (e.g., $150k+ per claim)
- tighter restrictions on abuse coverage or
- shrinking capacity
the Catholic sector may be forced to ask a fundamental question: Can we continue to rely on external insurers for a risk that has become both structurally uninsurable and financially volatile?
There are credible alternatives which can be considered for further review.
Conclusion: A Moment of Reckoning, and an Opportunity
The High Court’s decision is more than a legal shift, it is a recalibration of institutional responsibility. Coupled with the closure of the CCI run-off and a tightening insurance market, Catholic organisations face a convergence of pressures that cannot be addressed through traditional approaches alone.
This moment demands strategic, sector wide rethinking.
CRIS is uniquely positioned to lead this conversation:
- to interpret legal developments,
- assess insurance market viability,
- and explore innovative funding mechanisms tailored to the Catholic context.
Transitioning to long term sustainable risk financing may not simply be an option, it may become a necessary evolution for the Church’s mission, governance and stewardship responsibilities.
References:
Wotton + Kearney
High Court expands non-delegable duties in landmark child abuse decision (11 Feb 2026).
Bellrock Advisory
High Court Judgment Signals Broader Liability for Religious Institutions – AA v The Trustees of the Roman Catholic Church (17 February 2026).
Law and Religion Australia
Strict Liability for Abuse Committed by Non‑Employees: The AA Case (16 February 2026).
Mills Oakley Lawyers
Case Note: AA v Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle [2026] HCA 2 (13 February 2026).
Fallu McMillan Lawyers
The High Court’s Landmark Decision in AA v Trustees of the Roman Catholic Church for the Diocese of Maitland‑Newcastle (2026).