Bankrupt Catholic Dioceses’ Victim Payout Deals Spurn Insurers

Bankrupt Catholic dioceses are buckling to child sex abuse victims’ payout demands by offering them valuable rights to directly sue church insurers, riling up questions about the legality of such deals.

Catholic dioceses in the last 20 years have struck nearly two dozen victim settlements with their insurers’ cooperation in trying to exit bankruptcy proceedings. But growing disputes over the value and validity of many legacy sex abuse claims have created a rift among the parties.

The rift has forced some dioceses to negotiate with either victims or insurers instead of both, together. As a result, the dioceses’ insurers could ...