Risk Management Insurance
 

My work w/various Lambda Chi Alpha chapters has taken me to schools all around the country.

Many chapters that are teetering on the brink of collapse seem to have one thing in common: despite warnings from our traveling consultants or interested alumni, the members insist that they can do pretty much whatever they want.

The reason for this is simple, and I'm quoting: "It's okay, we've got insurance with Lloyd's of London." For the record, the school I heard this at has placed LCA on a 5-year suspension. The house has been sold, and it's difficult to say at this point if they'll ever return to campus. With that said, here are my queries...

Do other GLOs have this same attitude? How many groups is Lloyd's backing? Have you found that alumni/ae involvement has helped in situations like this?

RE: the last point, I'm not sure if it helps in some instances because many of the LCA alums @ this august institution were just as crazed as the undergrads. Their primary reason for coming back to school for Homecoming was to get geezed and par-tay.

I know it's the end of the school year, and people are thinking about their summer vacations ("Oh, boy, gas here is only $2.13/gallon!"). Any thoughts on this are greatly appreciated.

Thanks--

Bill,

I don't know whether Lloyds is the common factor, but I think there are probably a number of chapters in every fraternity who have that attitude.

Unfortunately, it takes a suspension or closing to fix the problem, and sometimes a re-colonization works for a while and then goes down the same road that closed the chapter before.

I don't have an answer.

I have never heard that but if that chapter is seriously that dumb, then perhaps you should re-evaluate whether they are worthy of the insurance since they bring so much risk to you.

-Rudey

You're right. That's being done in some Delt Chapters -- but we can't be with them all at all times.

From a national (and advisor) standpoint, it's a real problem.

I don't tell people how to run chapters or fraternities. I like to do that only with my own. But it seems to me that when you've decided to expand to so many campuses, of varying intellect and risk, you would want to somehow get that level of risk down by, for example, having specific chapter advisors for each chapter.

-Rudey

Absolutely. We try to have an advisor, asst. advisor, house corp. committee (alum and actives) for every chapter. We also try to have mentors. In addition, we try to have a Division VP for every few chapters (that's was I was until recently) to back up the Advisors.

Problem is that, depending on the chapter location, we might not have enough (or any) alums in the area willing to donate the time and energy. In addition, there are potential liability problems for advisors now -- even though the Fraternity has insurance for them as well.

In some cases, we have house mothers or even proctors -- and if they're strong enough, that may be one of the strongest solutions because the advisor doesn't live at the house and can't be a 24/7 pair of eyes and ears.

And, in reality, the other problem is that some (usually younger) alums are as crazy at the undergraduates.

Why are advisors a liability? I never heard that before. Is it because they're "crazy as the undergraduates"? I guess I never saw anything in the news about advisors being labilities...

-Rudey

Re: Risk Management Insurance
 

Well, in reading some headlines about the lawsuits and charges against fraternities on many different campuses, you'd think the undergraduates would get the message:

Yes, you are insured, but only IF you follow the guidelines (in other words, the RULES) established by your national organization, campus, and chapter by-laws. If it can be proved you knew you were violating rules, and chose to do so anyways, then the insurance WILL NOT APPLY if you have any damages.

Insurance is NOT a "catch-all" and safety net. You can be in serious trouble if the insurance company decides not to underwrite a claim. If a claim is large enough (i.e. from a lawsuit)...it could potentially drag down an entire national organization, and I believe that came very close to happening to another national GLO just a couple of years ago.

I think it ties back into the same problems we're always seeing in chapters that suddenly find themselves on the chopping block: (1) the "it can't happen here" mentality, (2) the "it's OK, we're insured" fallacy, (3) the worst: "it's tradition".

Basically, it all ties back to a familiar phrase "Those who refuse to learn from the lessons of history are doomed to repeat it."

Ignorance is NOT bliss. Ignorance is just a guaranteed path to obsolesence.

< Stepping off soap box now >

I don't know about advisors being a liability, but advisors can be liable if they knew about an event and didn't bother to report it if it falls out of the guidelines of the organization.

Well guys, that's "there," not "they're." The advisors aren't the liability, the fact that they are being sued along with the chapter officers and national organizations is. So, they HAVE liability these days, not ARE a liability.

Sorry. My mistake.

-Rudey

No problem. We all make them.

I just wish I could figure out a better way of recruiting, keeping, training and protecting alumni volunteers.

This is new to me! "We have Risk Insurance and everything will be fine".:(

That is one of the most inane things I have ever heard for a reason to act obnoxish and stupid!

I am with many Alums on this! We as a Chapter have mentoring sessions twice a year to work with the Active Chapter. We try to get as many Alums to participate in functions at least twice a year if not more.

One that I could not attend turned into a fiasco, aka Bitch session and help alienate the Chapter.:mad: One of the strongest die hard Alums walked out on it and went home.

Well, it turned out that after a year, the Bad Apples were weeded out as they did not pay their bills and grades kept them out of Active Status.:)

We as a Chapter became very close to being shut down and I even recommended it at a Meeting.

Basically, we have two mentoring meetings to cooencide with the Semesters and two House Corporation Meetings so that equals four meetings of Actives and Alums.:)

We as most Alums do not try to run the Chapter, but are there to help. When they do not accept that help until they find themselves in trouble then, there is a serious problem. No amount of Risk Insurance will help them.

As I stated, I suggested in a Major meeting, unless they got it together, then I remmended that the Chapter be closed down.

Maybe the light switch was pulled and the bulb came on!

Now, the Chapter is recovering and doing some great things with a lot less people, but paying the bills, not crying about we dont have a house and cannot rush. A new web site has been done by a Brother Active and everyone is seeing a turn about!:D :cool:

So, I guess my question is, whose fault is it?:confused:

Is it the Alums for not doing anything or the Actives who run the day to day?

I still feel, it is Both the Alums and Actives working together to make a strong and solid Chapter.:)

Re: Re: Risk Management Insurance
 

As as underwriter, truer words were never spoken and it never ceases to amaze me how many people with insurance don't understand that when you violate the terms of the policy (by doing something that isn't covered) you aren't covered.

Thanks LXA and Bluefish,

I think there was a thread a few months ago where a company (might have been Lloyds) was going to refuse to pay a claim for just that reason. The chapter didn't follow the rules. I don't remember the outcome -- perhaps a compromise -- but some of the undergrads were probably outraged.

To borrow a line from a former TV detective show, "Don't do the crime if you can't do the time."

Well, OK, the analogy is weak, but I've always liked the line.

You're right...not a good analogy....rather an ironic one, considering the show, and the star of it, isn't it?

The chapter you refer to I believe was the LXA chapter at ASU - regarding the death of an underage girl who, if memory serves, received alcohol at a chapter function, and was hit by a car on the way home, or otherwise involved in some sort of traffic accident, which killed her.

So, providing underaged students (or anyone for that matter) NEGATED the Risk Management Insurance. I believe the matter was settled out of court, but, the insurance company did not pay at all.

Tom, you're right...the alums have to work together to ensure the active members "get it" - we used to do a risk management seminar at CSU, and an attorney versed in fraternal litigation (yes, it is it's own legal discipline these days!), laid it on the line. The members did "get it" - and that meeting led to some heated discussions in subsequent chapter meetings - the topic of insurance was brought up.

Sadly, a few years later, this chapter was closed for risk management - I was no longer chapter advisor, and there was some disconnect that occurred between alums/actives - and it happened in a short period of time, so this is something that needs consistent follow-up. To fail to do so puts the chapter in peril.

Reading this incident, it is important to note that the chapter could have been liable for her death even if she was of age. I don't know what the law is like in your neck of the woods but I'm sure it's very similar. A party host/hostess can be liable for death involving (whether caused by or happened to) a party guest.
For example, if a guest leaves a party after consuming too much alcohol and gets into their car and causes an accident, the part host/hostess could be found at fault.
This is also something chapters should be aware of (if indeed it's law). Which is why many (inter)nationals require events involving alcohol be at thrid party vendors.

What would the insurance cover if it doesn't cover drinking? If it doesn't cover drinking shouldn't the insurance be exponentially (being a bit drastic I know) less?

-Rudey

General liability, fire, accidents on property, etc. (like any home or car policy).

The reason for the company not honoring the policy in the case above was that the chapter broke the law by giving alcohol to a minor. Pretty much any policy will become null and void if the law or the guildlines of the policy aren't followed.

It's expensive because of the high risk of fraternities, correct?

Now that risk is mainly from underaged drinking and hazing, correct?

Those last 2 risks are against the law, correct?

If they're against the law, and thus the insurance won't cover them then why is the insurance since it won't touch that risk threshold?

-Rudey

Sorry, I don't understand the question.

If fraternities pay that much more for insurance because they are higher risks, then wouldn't it make sense that the insurance should cover those risks?

-Rudey

The Higher Risk Insurance does not cover such things as breaking the laws. While I dont think that this little girl got her alcohol from LXA Party as it was nver proved,and she was killed by a drunken driver who was a lawyer, after 3 years it was so ajudged. Did they deserve it, I dont think so, but it was still handed down by ASU and LXA Hdq.

So, they are gone.

The higher Risk Insurance covers Liability, Accident, Fire, ETC!

Once The Contract with a Company is broken, they deem themselves not bonded by that agreement or contract.

According to Stipulation Z, Section 1000, and Section 50 qazillion part xyz, they can and will deny any fault and payments.:confused:

So basically, No Fault Risk Insurance is written just like your Homeowner, Vehicle, Medical, and Life Insurance!

Pay out the butt but, duck and cover.

That still doesn't answer the question. A standard homeowner's policy covers liability, accident and fire. Why should a fraternity pay a high risk premium that is over and above the standard premium if none of the high risk activities are going to be covered? It would be like buying flood insurance because you live in a flood plane but the insurance doesn't cover floods.

Precisely.

-Rudey

Ah, I understand. Actually, the highest items, liability wise, for fraternities are fire, injuries from falls (many alcohol related -- whether the drinking was in the house or not) and damage to structures related to parties, etc. Alcohol is on top of that.

I'm sure there are some stats on costs for "dry" houses as oppossed to "wet" or "damp," but I don't have them.

I just have to say.. I live in a flood zone, am required to purchase flood insurance at the cost of $1200 per year, and it doesn't cover anything in the basement except the washer, dryer, furnace and hot water heater (expected items to be in a basement). So, I do ask that question often, because if there was a flood, which part of the house would get ruined without a doubt??? The BASEMENT! The insurance industry is truly insane.

Dee

While the homeowner's policy does cover those, if the fire starts as a result of the homeowner manufacturing meth in their home or doing something illegal - the insurance company isn't going to pay a dime.
Chances are the reason their (fraternities) insurance is higher is because there is a greater risk for something to happen, but if something happens that's illegal and is excluded on the policy like serving minors, whatever, then they aren't going to cover it. It's all going to depend on what the insurance company has choosen to exclude in their coverage. This probably isn't giving a really good answer though, is it?

AGDee, as for the flood insurance thing, I don't do flood insurance. But I'm pretty sure the reason that you wouldn't have anything other than coverage for those items is because you are aware that you live in a flood plane and as a result - a flood is almost inevitable and therefore a risk you solely assume for choosing to live there. That's just a guess though. And yes insurance is a crazy thing.

I don't see how fraternities will have more fires and people falling, so the one factor that makes a fraternity's insurance higher than a sorority's is that there might be damages to the structure from parties?

-Rudey

Historically speaking, I think you are partially right. Plus, Panhellenic orgs also have much more stringent controls over their chapters than do fraternities...not to mention housemothers. Plus, sorority houses are also by and large in much better condition quality-wise than fraternity structures.

The fact is we have created this own problem for ourselves. The loosening if not complete abandoning of central control in the early 70's by most GLO's, and the subsequent wild 80's and early 90's are now being paid for by today's members.

But the fact remains that fraternity claims are more frequent than at sorority houses.

Although surveys show that a fairly substantial amount of damage to fraternity houses is actually caused by women (sorority and other) who are visiting or partying at the house.

Fires, falls, insurance
 

The liability coverage that we have been able to obtain carries some conditions. The carrier has stated that if you engage in specified activities to reduce risk then they will ensure certain risks.

Some of the conditions are: (1) that the chapter must obey liquor laws (2) engage in a series of training sessions designed to reduce risk (3) conduct activities in such a manner as to reduce risk of injury / claim. If you don't follow the rules laid down by the carrier, you have broken the contract and there is no coverage.

With respect to the liability for falls, most of them are alcohol influenced. being drunk and falling seem to go together. Too much booze = claims.

Fire is very scary. Fraternity houses, as has been stated, tend to be older and in rougher conditions. There may have been modifications made to the house by the brothers that do not meet applicable building or fire codes.

To add to this unpleasant set of circumstances, there have been fires during the night following a party when the members and guests are sleeping it off. LXA had this very thing happen at Texas in the early eighties and a girl died of smoke inhalation. Alcohol may not start the fire, but it aggravates the problems with evacuation.

Kids in college do dumb things. Guys in fraternities sometimes do dumber things. An insurance carrier is in business to make money and they set their rates so that they will still make a profit after claims are paid. The low rate of return in the stock market (and low rates for other investments as well) dictate higher premiums to cover the lower yield on insco investments and the predictable claim payouts.

Risk management is a fact of business life today and GLOs are businesses. It is not negotiable with a carrier. Play by their rules or go without coverage. Violation of the LXA risk management policy led to the closing of Arizona State and UCLA, to name just two chapters that we've lost. I had the unpleasant job of telling our national board that Towson State had to be closed for risk management problems - very unpleasant duty.

If the chapter plays by risk management rules, I'm covered as a volunteer. If they break the rules I may be without coverage. A chapter advisor has every reason to push risk management as he or she is risking all that they have worked for should a suit be filed and the carrier declines coverage.

And oh yes, add potential crimional liability as well. Fullerton PD has promised me that I will go to jail if I'm present and there is under-age drinking, whether I am aware of it or not. In some ways, I am putting my license to practice law in the hands of eighteen year old freshmen at the chapter house every time they have a party.

That's reality. Harsh, isn't it.