The Catholic Church in Ireland took out special insurance in 1987 to cover claims for child abuse.

Today's FT reported that the church revealed yesterday that when the first cases started to surface in the mid-1990s, its insurer, Church & General, capped its liability at just £8.4m.

Last week the Church paid out €400,000 (£173,500) in a civil action against the Dublin diocese over an incident in 1985. The church admits there could be hundreds more cases.

The unprecedented settlement with its insurers followed a three-year dispute over the extent of the company's liability.

Church & General, which by 1999 had become part of Allianz, agreed to make a settlement towards the cost of claims.

The settlement has cast doubt on the Irish government's indemnity scheme for religious orders.

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