Self-insurance to cover inquiry costs

When Mary Jo White, the lawyer retained by the Diocesan Review Board to look into allegations against Bishop Howard J. Hubbard, announced her fee, many Catholics wondered where the money would come from and if other programs would be adversely affected. In response to those questions and concerns, the Albany Diocese released the following statement:

The Albany Diocese, like many large organizations, established a self-insurance fund 25 years ago to save money and maintain stable pricing for property, casualty, liability, auto and workers' compensation coverage.

Each parish, school and other agency in the Diocese pays premiums to the Diocesan Insurance Fund for coverage of its insurance claims. Less than five cents of every dollar in revenues received by parishes is used to pay for all insurance coverage, including claims and costs related to clerical sexual abuse allegations. (Of $54 million in revenues received by parishes in 2003, $2.5 million was used to pay insurance premiums.)

The Diocesan Insurance Fund covers property damage claims up to $1 million and liability insurance claims up to $250,000. It also purchases from commercial insurers excess insurance coverage for catastrophic claims beyond these amounts.

By combining insurance coverage for all diocesan entities into one group, the fund has made overall coverage considerably less expensive for the Diocese than it otherwise might have been.

In addition, the Diocesan Insurance Fund gets the benefit of receiving the income earned on the invested premiums. This has allowed the Diocesan Insurance Fund to build up significant reserves to handle insurance claims and costs. Had the Diocese purchased similar insurance from a commercial insurer, the income earned on the invested premiums would belong to the commercial insurer.

As a result of strong investment performance and prudent risk management by diocesan parishes and agencies, the Diocesan Insurance Fund has ample resources to cover not only the sexual abuse-related claims and costs (including the cost of the investigation being conducted by Mary Jo White) but the other insurance claims and costs as well.

As a measure of the financial strength of the insurance fund, it should be noted that since 1993, premiums billed to diocesan entities by the Diocesan Insurance Fund have been increased only twice and by only two percent in each instance. By comparison, during the same period, pricing has more than doubled for most commercial insurance purchases. In addition, in the last five years, the Diocesan Insurance Fund has refunded an average of 10 percent of the premiums paid annually by parishes and other entities.

(2/26/04) [[In-content Ad]]