Fraternity vs. Sorority in Insurance

[moe.ron]

Here is an interesting article about the insurance cost for fraternities:

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.

http://www.mcall.com/news/local/all-...-newslocal-hed

[DeltAlum]

No surprize here. We alumni members who have been local, national or divisional officers have talked about this on many threads. It's good to see in in writing, though.

It's a wake up call that few heed.

[exlurker]

Thanks, moe.ron, for posting that!

Just a couple of thoughts:

First, is it pretty safe to assume that the legal counsel and the Greek life office for every college and university is aware of the famous out-of-court settlement by MIT in the death of Scott Krueger (fraternity-related, alcohol-related)? The amount -- and this was a few years ago -- was six million dollars. i have a feeling that it may just be a matter of time before someone's parents are successful in a suit against a fraternity and are awarded millions.

Second, as to the "transfer of liability" to fraternities when there's a joint fraternity-sorority event with alcohol -- are any fraternities beginning to look serously at the wisdom of continuing to agree to those arrangements? It's really looking like the risks are getting far too high.

[thedeepblue]

I think that the fact that any one student in a fraternity can be charged for a crime related to the fraternity will put many people off joining them. What I'm trying to say is that if someone dies of alcohol poisoning a frat party and I am member, it is not my fault that the person died, however I can still be charged with the person's death.

Is this true or am I not correct?

[Kevin]

Unless you're president or a senior officer, most likely, they'll leave you alone. Otherwise, there is a risk associated with that position. If you do take a postition like that, it is up to you to make your chapter a safe place to be.

[moe.ron]

Originally posted by ktsnake
Unless you're president or a senior officer, most likely, they'll leave you alone. Otherwise, there is a risk associated with that position. If you do take a postition like that, it is up to you to make your chapter a safe place to be.

Unless you were the "bartender" and they proved that you were the one serving the alcohol. They you will be one of the people being sued. This is why I would advocate 3rd party vendor and a different location. Benefits:

1) Liability goes down
2) The house will not be wreck

[madmax]

Originally posted by exlurker




Second, as to the "transfer of liability" to fraternities when there's a joint fraternity-sorority event with alcohol -- are any fraternities beginning to look serously at the wisdom of continuing to agree to those arrangements? It's really looking like the risks are getting far too high.

Yes and it is about time fraternities start transfering the liability back to the sororities. Let them supply their own beer that way when their underage drunken members do something stupid they get charged not the fraternity.

[33girl]

Originally posted by madmax
Yes and it is about time fraternities start transfering back the liability to the sororities. Let them supply their own beer that way when their underage drunken members do something stupid they get charged not the fraternity.

I completely agree. This is one of the reasons I oppose alcohol-free facilities in NPC housing. It's not fair to the guys to make them our suppliers or go to their house and mess it up and then leave. Not to mention how yucky it is to promote a culture where the women are dependent on the men for alcohol and their social outlets.

Either everyone should have alcohol free houses, or the women should step up & take part of the responsibility...girls drink, it's time we admitted it.

[Rudey]

Originally posted by madmax
Yes and it is about time fraternities start transfering the liability back to the sororities. Let them supply their own beer that way when their underage drunken members do something stupid they get charged not the fraternity.

Snaps.

-Rudey

[Stacekat]

While I totally agree with what you are all saying, most sororites are not allowed to allow alcohol at any sorority sponsored event. Plus, a lot of sororities (mine) are legaly fraternities. So unfortunately we pay the same high rates just because of our fraternal designation.

[Lady Pi Phi]

Originally posted by 33girl
I completely agree. This is one of the reasons I oppose alcohol-free facilities in NPC housing. It's not fair to the guys to make them our suppliers or go to their house and mess it up and then leave. Not to mention how yucky it is to promote a culture where the women are dependent on the men for alcohol and their social outlets.

Either everyone should have alcohol free houses, or the women should step up & take part of the responsibility...girls drink, it's time we admitted it.

I don't know if this is an NPC rule or a Pi Phi rule, but we are not allowed to attend parties at fraternity houses that are not dry.

[WCUgirl]

Originally posted by Lady Pi Phi
I don't know if this is an NPC rule or a Pi Phi rule, but we are not allowed to attend parties at fraternity houses that are not dry.

If it isn't an NPC rule, it's also an AZD rule. The whole 3rd party vendor and no non-dry fraternity mixers rules started back in 2000 I think.

[33girl]

LPP - Are you talking about the "more than 3 sisters anyplace is an event" thing? I doubt if you individually wanted to go to a fraternity party that they could do anything about it as far as chapter discipline.

And many if not most sororities are officially "fraternities" - I don't think it means you pay the same rates - it has to do with whether it's a men's or women's group. By that logic, Kappa Alpha Order would pay different rates since it's an "order" not a fraternity.

I realize what the rules are as they stand right now - I'm just agreeing with the guys who say it's not fair that everything falls on them and that if we want to present ourselves as orgs that build strong women, making us reliant on men for a social life isn't the way to do it.

[WCUgirl]

I think she's talking about mixers as opposed to random Friday night parties - 'cause that was the same thing for us.

[SmartBlondeGPhB]

Originally posted by Lady Pi Phi
I don't know if this is an NPC rule or a Pi Phi rule, but we are not allowed to attend parties at fraternity houses that are not dry.

Gamma Phi is the same.