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05-03-2004 11:13 AM |
Fraternity vs. Sorority in Insurance
Here is an interesting article about the insurance cost for fraternities:
Quote:
Frats struggle with liability threats
Is insurance enough? Civil suits over serving alcohol are shaking up the college greek system.
By Christina Gostomski
Of The Morning Call
Two months ago, Cheng ''Jack'' Wang was a carefree college senior on his way to graduating at the top of his class at Lehigh University.
Today, the future is a little shakier for the 21-year-old of Beaverton, Ore., who was charged in March with reckless endangerment, making false reports and selling alcohol to minors after a 19-year-old woman passed out from drinking alcohol at a party in his fraternity house. Police said Wang was tending bar at the party.
What happened to Wang is far from unusual, according to educators and greek life experts who say that criminal and civil courts are increasingly holding fraternities — and their members — responsible for incidents that happen at chapter houses.
As the potential liability associated with greek life has increased, colleges, sororities and even parents of fraternity presidents have taken added measures — often in the form of millions of dollars of insurance policies — to protect and distance themselves from fraternities.
''It's in vogue to really look at the greek system. It's an easy target,'' said Cindy Stellhorn, vice president for the sorority division at MJ Insurance in Indianapolis, which insures 22 of the 26 national sororities in the United States.
Around the country, civil suits against fraternities and criminal charges against fraternity members have become increasingly common.
In November 2002, the family of Daniel Reardon, a fraternity pledge who died of alcohol poisoning from purported hazing the previous year at the University of Maryland College Park, filed a $15 million lawsuit against the Phi Sigma Kappa fraternity and two of its members.
In June 2003, the University of Pennsylvania and the parents of former Penn student Michael Tobin reached a confidential settlement in a wrongful death suit Tobin's family filed against the school and Phi Gamma Delta fraternity. Tobin reportedly fell down an outside staircase at a fraternity house after a night of drinking in 1999.
And after the October 2000 death of a California State University-Chico freshman from complications of alcohol poisoning after a Pi Kappa Phi fraternity event, criminal charges were filed against the chapter president and other fraternity students.
A civil lawsuit also was filed against the national Pi Kappa Phi fraternity, the local chapter and eight members of the chapter. The case against the students was settled for $500,000; a confidential settlement was reached in the lawsuit against the fraternity and chapter.
''Lesson learned: As a chapter officer, you may be held responsible for an event, whether you attend or not,'' Mark Timmes, chief executive officer of the national Pi Kappa Phi fraternity, wrote in a newsletter to other fraternities warning them of potential lawsuits.
In fact, the exposure to liability has become so problematic that some students say they wouldn't want to be presidents of fraternities for fear of being held responsible for the chapter's actions.
''No one wants to take a role because of the liability. Why would you run for president?'' said Lehigh junior Julia Nolf of Saylorsburg. Nolf is a member of Lehigh's Greek Life Task Force, a committee of students, staff and alumni that is evaluating the school's fraternities and sororities.
Senior Seth Yerk, former president of Lehigh's Interfraternity Council, which oversees the campus fraternities, said he opted for that position over being a fraternity president partly because the job had less liability. When his brother attended Lehigh and was elected fraternity president, his parents took a $1 million insurance policy on him to protect against a lawsuit.
''I can't say that I want to comment on whether it's a necessity,'' Rich Jungman, manager of client services and claims at HRH-Kirklin and Co. in Omaha, Neb., said of parents taking additional insurance policies for their children. But, he said, ''anyone who has a kid, whether they're in a fraternity or not, has to make a decision about whether they want some kind of liability insurance coverage for them.''
He said the ''leading cost of loss to fraternities is fall from heights'' and that ''the majority of incidents do have the common denominator of alcohol.''
In Wang's case, no civil suits have been levied to date against him, the fraternity Theta Delta Chi, or his two frat brothers, Edward Cilli and Mete Kahyagil, who also were arrested.
Police charged Theta Delta Chi President Cilli, 19, of Asbury, N.J., with reckless endangerment, making false reports to police and selling or furnishing alcohol to minors. Kahyagil, 20, no address given, who told police he found the woman walking along the street and was only trying to help her, was charged with reckless endangerment, making false reports and unsworn falsification.
No charges were filed against the Chi Omega sorority house, which co-hosted the party, or the students who are members.
Greek life experts say it's not a surprise police didn't discipline the sorority.
Sororities have notoriously tried to distance themselves from the liability claims that plague fraternities.
''I question why the three co-defendants are the only ones targeted in this,'' said Wang, whose criminal case is still pending and he has yet to learn of possible disciplinary action from the school.
Unlike fraternities, sororities ban alcohol and parties from chapter houses. Sororities can ''co-host'' parties at fraternities but they cannot pay for or supply the alcohol. Those policies give the women's groups a layer of protection, Stellhorn said, adding that her agency, which has insured sororities since 1984, has never had an alcohol-related death or claim.
''What happens is the fraternities buy the alcohol and the women's groups buy the snacks. There's a little bit of risk transfer there,'' Stellhorn said. ''The issue is who is the most negligent? The fraternity hosts and buys the alcohol … Whoever buys the alcohol bears the primary responsibility for its consumption.''
MJ Insurance won't insure fraternities for that reason, Stellhorn said. Sororities, she said, are a ''much lesser risk to insure.''
Sororities aren't the only ones trying to protect themselves from fraternity-related lawsuits.
With increasing frequency, colleges now require the social organizations to carry insurance and have policies that list the college as an ''additional insured.'' In the event of a lawsuit against a college for a greek-related incident, that policy forces the fraternity or sorority to pay for the college's legal costs and other fees until the organization reaches it maximum coverage.
Dana Scaduto, general counsel for Dickinson College in Carlisle and Gettysburg College in Gettysburg, said she advised both colleges to require greek organizations to list the schools as ''additional insured.''
''I strongly recommend to the colleges I represent that those risks are adequately insured,'' she said, adding she suggests that non-residential greek organizations carry a $1 million insurance policy and that residential groups carry policies of $3 million to $5 million.
Lehigh University officials would not release details of their insurance policy or their requirements for fraternity and sorority insurance policies.
''Lehigh is insured against risk. We do not disclose our risk management portfolio,'' university spokesman Andrew Stanten said.
But one thing is certain: The insurance doesn't come cheap. Stellhorn said the average insurance cost at her agency is $25 to $35 per person for sororities. Agencies insuring fraternities typically charge $145 to $280 per member, she said.
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