The monetary cost of not doing risk management

[moe.ron]

Fraternities pay high insurance costs

By Cara O’Connor
Arizona Summer Wildcat
Wednesday July 23, 2003

Liability expenses exceed those of sororities, result from hazing activities, alcohol violations

Fraternities at the Uuniversity of Arizona have been in a lot of trouble lately.

The Dean of Students office has cracked down on hazing activities and alcohol violations, revoking the recognition of four fraternities since December: Pi Kappa Alpha, Sigma Alpha Epsilon, Sigma Chi and, most recently, Kappa Sigma.

And the Dean of Students office is not the only place that fraternities are feeling the heat. The organizations are also paying up in the courtroom.

Lawsuits against fraternities have become more prevalent in recent years, costing fraternities tens of millions of dollars in settlements.

In recent times, legal action against fraternities has even made an appearance at the University of Arizona.

In 2001, the mother and sister of a pledge who died in a motorcycle accident during initiation week brought a lawsuit against Phi Delta Theta fraternity, accusing the fraternity of pressuring the student to binge drink.

The UA chapter of Pi Kappa Alpha fraternity (Pike) had its national charter revoked in June. Between 1993 and their recent passing, the chapter had incurred more than $120,000 in liability program expenses from three claims, according to a letter from Pike Executive Director Eric Wulf.

Liability expenses like these drive up insurance prices, making it more expensive for all fraternities to operate.

Fraternity men cover the extra expense with their membership dues.

“I would say a large chunk of it goes to insurance, probably second only to rent,” said Clint Walls, Interfraternity Council vice president of public relations.

The university requires that housed fraternities and sororities have $1 million in liability coverage. Fraternities that host social events with alcohol (sororities are not permitted to host such events) are required to have an additional $1 million of coverage, said Kathy Adams Riester, senior coordinator of the Center for Student Involvement and Leadership (CSIL).

While each year sororities pay $7 to $14 per member for insurance coverage, fraternities pay anywhere from $150 to $300 per member for the same coverage, said Cindy Stellhorn, vice president of M-J Insurance Inc.

“I wouldn’t be surprised by that figure,” Walls said. “Sororities are not the ones who are doing the crazy risk taking.”

Stellhorn said the highest risks in sorority houses are candles, curling irons and appliances, as well as injuries at socials and philanthropy activities.

The biggest risks for fraternities involve alcohol abuse, hazing practices and social events with alcohol.

“Fraternities are not only more likely to take unnecessary risks, but they have more opportunities to,” Walls said.

Fraternity men will pay anywhere from $240 to $2,400 this school year for membership dues. These dues do not include rent or meal plans. Pledges can expect to pay higher dues their first semester, including additional fraternity initiation fees.

Sorority women will pay anywhere from $170 to $5,220 this year in dues. Much of this goes to pay for housing and meal plans, even for those who live off-campus.

Sororities also tend to invest more in housekeeping and facility upkeep than fraternities do, as is evident in the appearance of the chapter houses, Riester said. Many chapters also pay to have a live-in house director.

The groups without chapter houses generally have the lowest chapter dues because they have a lesser need for insurance.