A psychologist who advised the Catholic Church committee that deals with sexual abuse says the church's insurance company dictated how victims should be treated under the Towards Healing protocol.

Dr Robert Grant is a US-based psychologist who specialises in abuse and trauma, has worked with the Catholic Church on sexual abuse issues in seven countries, and has written a number of books on clerical abuse.

In the late 1990s he was living in Sydney and advising the St John of God brothers in relation to the psychiatric facilities they ran.

He was soon asked to help the National Committee for Professional Standards, which was working on the draft of Towards Healing, the church policy for dealing with clerical sexual abuse.

Dr Grant has told Lateline he was disturbed by how much influence Catholic Church Insurance had in formulating the church's protocol.

"When I came into the process somewhere in 1996/97, CCI was at every meeting," he said.

"They either had one or two of their senior representatives, and/or a lawyer at each of the meetings I attended.

"They would object to any language that was used in the Towards Healing document that would put the church at risk in terms of admitting culpability.

"At first I thought maybe they were there to advise the church about the risk of taking certain pastoral stances but I began to realise quite quickly that they were dictating policy."

After becoming concerned that the church was pursuing a legalistic approach towards victims, Dr Robert Grant says he addressed the committee, arguing that the church would be better off in the long term if it was transparent and honest.

Dr Grant says he was floored by the response.

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"A senior official at CCI stood up immediately after and said 'I need to remind the members of the committee that I just destroyed 40 boxes of personnel records', and I was shocked, I was dumbfounded," he said.

"Not only the timing - I realised it was a statement to me how things were going to be run - but I was even more shocked that no-one on the committee saw any contradiction between what I just said and what this senior CCI official had said."

CCI chief executive rejects Robert Grant's report

Catholic Church Insurance declined Lateline's request for an on-camera interview.

Peter Rush, who joined CCI as a manager in 1998 before becoming CEO in 2009, said via email: "I have no knowledge of Mr Grant, the comment attributed to 'a senior official of CCI' or of the alleged destruction of personnel records...and I do not accept that any senior officer of CCI would have engaged in the inappropriate destruction of documents."

Sister Angela Ryan, a former committee member, has told Lateline she has no recollection of the incident described by Robert Grant.

She also rejected the claims that CCI were dictating policy to the church. Sister Ryan declined to be interviewed.

However, the strong links between Catholic Church Insurance and Towards Healing are indisputable.

Mr Rush, and one of CCI's directors, Sister Clare Condon, both sit on the National Committee for Professional Standards, the body that oversees Towards Healing.

Sister Angela Ryan was a committee member while also a director of CCI. Laurie Rolls, a long-term committee member, is the special projects manager at CCI.

Father Brian Lucas, who recently faced questions at the special inquiry in Newcastle over why he failed to take evidence of child abuse to police, has also represented both bodies.

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Back in the 1990s when he was dealing with paedophile priests like Denis McAlinden, Father Lucas was also a member of the committee that dealt with sexual abuse.

In 2002, he became General Secretary of the Bishops Conference and a year later a Director of Catholic Church Insurance.

The Bishops Conference receives dividends from Catholic Church Insurance and oversees the committee. The committee itself is part funded by the insurance company.

Responding to abuse claims is part of company's core business

Catholic Church Insurance is a charitable institution exempt from income tax.

It is 100 per cent church owned. If the insurer makes a profit, the church profits.

It was established in 1911 to insure church properties against fire, but in recent years, responding to claims of child sexual abuse has become a part of its core business.

At a recent parliamentary inquiry in Victoria, Mr Rush admitted that since 1990, CCI had paid $30 million worth of compensation and counselling costs to about 600 victims.

Mr Rush declined Lateline's request for a national figure on payouts, citing commercial in-confidence.

Catholic Church Insurance says it has returned over $250 million to the church in the past 34 years.

According to its 2012 annual report, CCI's role is "to protect the interests of the church community and to return any surplus back to that community."

Victims' lawyer says relationship with insurer is conflict of interest

Jason Parkinson, the principal of Porters Lawyers, has represented hundreds of clerical abuse victims.

He says the church's relationship with CCI is a conflict of interest.

"They are profiting from the money that they've saved by not paying proper damages to victims of child sexual abuse," he said.

Mr Parkinson says through Towards Healing, the church has used a range of tactics to minimise payouts to victims.

"They've been told that to the knowledge of Towards Healing that they're never heard of that alleged abuser before when in fact Towards Healing has made payments in regard to that actual abuser previously," he said.

"They are told that they will never be able to sue the Catholic Church because their abuse occurred too many years ago. That's not true.

"They're also told that they needn't get a solicitor to advise them because they'll just keep it between themselves."

At the Victorian Parliamentary Inquiry, Mr Rush claimed his staff were removed from the Towards Healing process.

"In all matters referred to Catholic Church Insurance," Mr Rush testified, "our officers remain independent of the underlying process."

But Lateline has obtained a file note written for CCI and church lawyers in 2003 that shows CCI's lawyer was present during a meeting between a victim of abuse and a representative of a religious order.

The briefing note says: "On behalf of CCI Paul Gamble offered $20K, then $30K and finally $40K plus legal fees. Ian was very hesitant to accept this offer, and asked to speak to Bro Peter without the lawyers... Bro Peter indicated to Ian that he should accept the offer."

Another key insider in the Towards Healing process has told Lateline it was common for CCI lawyers to be either in the room, or the room next door while clergy met with victims.

Victims misled by Towards Healing process: lawyer

Mr Parkinson says victims have been misled by the Towards Healing process.

"They invite victims of child sexual abuse, who are suffering from psychiatric injuries, to come to Towards Healing where they give the illusion that you're dealing with a brother from the church or one of the nuns, when in fact they're acting as agents of the Catholic Church Insurance," he said.

Dr Grant says the perspective of victims was missing from the church committee debate surrounding the Towards Healing protocols.

"I never heard victims talked about, I never heard people being concerned about the wellbeing of victims or how the document would affect victims," he said.

"I heard more about church liability and there was talk about priests that were being unjustly accused.

"I even brought up a couple of times, 'aren't we missing the whole population that this document is designed for, which is the victims?' But that again was not picked up or developed, at least during my tenure.”

Catholic Church Insurance and the Australian Bishops Conference declined requests for interviews.

Lateline approached 12 past and present members of the National Committee for Professional Standards including Father Lucas, Bishop Geoffrey Robinson and Mr Rush, and all declined to be interviewed.