Zurich Municipal, the insurer at the centre of compensation claims arising from child abuse at north Wales care homes during the 1970s, expects to face an eventual bill of 'several million pounds'.

David Forster, for the Anglo-Swiss insurer, said it has so far paid out £1.4 million for 115 claims relating to allegations of abuse in children's homes run by the now-defunct Gwynedd and Clwyd county councils.

This figure represents settlements and offers in 75% of the 155 claims received by Zurich, acting as claims handler for the councils' original insurer, Municipal Mutual.

He said that although the insurer could not be certain of the final bill, it expects to pay several millions more.

"There is no such thing as a standard claim in child abuse cases, every instance has to be assessed on an individual basis to ensure compensation is fair and above board. But we estimate that the claims to come will be for several more millions of pounds."

Forster also defended the insurer's role in the alleged suppression of a Clwyd council report which detailed early signs of child abuse in council-run homes.

"The report was based on allegations which had not been substantiated. It therefore could not be published in its current format," he said.

He quoted the Waterhouse inquiry report into the child abuse scandal which said the insurers' representatives had acted with 'honourable intention' in preventing Clwyd County Council from acting in breach of its insurance policy by releasing the report.

Sir Ronald Waterhouse, the inquiry chairman, said: "The insurers' representatives adopted an interventionist role so that Clwyd knew exactly where it stood on the matter."

Mr Forster said Zurich welcomed Sir Ronald's call for the role of insurance companies in internal council inquiries to be investigated by the Law Commission.

The commission will investigate the law on qualified privilege, a legal protection that allows the press to disclose the contents of council reports but only if they have been released to the public, unlike the Clwyd report. The Waterhouse inquiry report has called for a radical overhaul of council-run children's homes, including the appointment of independent commissioners to investigate complaints of mis-treatment from children in each local authority area.