The monetary cost of not doing risk management

[DeltAlum]

This was posted on another thread, but I think it's worth repeating here. Essentially, Lloyds of London has refused to pay a claim against the Arizona State fraternity chapter because the chapter broke the law.

Which means, at least in the case of this particular policy and company, anytime a chapter serves underage drinkers, etc., they are no longer covered.

That's a really scary precedent.

I hope we don't get a lot of arguments that the company is being unfair.

It's the law.

Arizona Republic
July 18, 2003

No insurance coverage for ASU frat that served alcohol before fatal hit-run

by Jessica Wanke

An Arizona State University fraternity lacks the support of its insurance
company in a $1 million settlement it was ordered to pay for its role in
the 2001 death of an incoming freshman.

On June 12, a Maricopa Superior Court entered a judgment to be paid by
Lloyds of London, the insurer of the Lambda Chi Alpha fraternity, as part
of a civil suit filed by the deceased student's family. The insurance
company is saying the fraternity's policy does not cover such an incident.

Only days before the fall 2001 semester was to begin, Jessica Woodin, then
18, left a party at the fraternity's house on "old row" after drinking
three beers, according to court testimony. And at about 2 a.m., Woodin
walked into Apache Boulevard against the McAllister Avenue crosswalk light
where she was hit and killed by drunk driver Mark Torre, a Phoenix lawyer.

During the trial in 2002, the subject of Woodin's intoxication came up as a
factor in her death.

After Torre was convicted and sentenced to 9½-years in prison, the family
began to look at the other parties involved in the incidents of Aug. 18,
2001. The Woodins identified the fraternity as one of the parties who were
partially responsible for their daughter's death.

In the settlement the prosecutors agreed to not collect the money from the
fraternity chapter or its members and now they are unable to collect the
money from the insurance company.

Executive vice president of Lambda Chi Alpha national, Tim Helmbock, said
the organization pays for a policy that protects its students against
injuries or accidents, but because the members at ASU violated the law by
serving alcohol to minors, they cannot be covered. (Bold letters added)

Mark Meltzer, the Woodin family's attorney, said that he has been dealing
with the fraternity's ASU chapter, their national headquarters and the
insurance company separately, but that the interests of all three are
intertwined.

The family's civil suit has several other defendants, including the law
firm Torre worked for and the two Scottsdale bars, Axis Cigar Bar and Z
Tejas Grill, where he and a fellow lawyer drank prior to hitting Woodin.
Meltzer would not say whether there were any other settlements.

[KappaKittyCat]

Originally posted by DeltAlum
Essentially, Lloyds of London has refused to pay a claim against the Arizona State fraternity chapter because the chapter broke the law.

Which means, at least in the case of this particular policy and company, anytime a chapter serves underage drinkers, etc., they are no longer covered.

DeltAlum, you're spot-on. It says all over Kappa's RM forms that if we break laws or fail to comply with Fraternity RM guidelines, our insurance coverage is void.

Originally posted by LXAAlum
Instead of looking for loopholes to continue irresponsible behavior, we as greeks need to start living up to the standards that our founders envisioned.

LXAAlum, you've got it. There was a time when Greeks were the paragon college students, about whom universities and fraternities bragged like proud fathers. Now it seems that in many places, Greeks have become the drunken uncle who embarrasses everyone at the family wedding. It's time to get back to basics, people. What are we striving for? How should we live our lives?

I take my vows seriously. I've done some pretty stupid things in my day, and each time, my sisters gently reminded me that I wasn't living up to the standards I'd sworn to uphold. Nobody is above reproach, but (after being angry for a while), I was grateful to my sisters for showing concern. It is a sad day when Greeks feel such a sense of entitlement that we feel we may break the law and defy anyone to call us out.

Not bad for post #1000!

[DeltAlum]

Originally posted by KappaKittyCat
Not bad for post #1000![/i]

I'd say excellent for post # 1000.

[AXWhoah]

People need to learn to take responsibility for their actions. In the article it said that after the criminal trial the family of the girl who was killed started looking for other parties involved in their daughter's death. As far as I am concerned the only other party involved in her death is her. The same goes fot the Phi Delt at UA who was killed in a motorcycle accident. A bunch of my sisters lived in his dorm freshman year and they'll all tell you that he was always drinking, no one "made" him drink. That's a cop out for the family.

I'm tired of people getting hurt or killed while they're drunk from fraternity parties and then suing the fraternity. In most cases no on poured the drink down their throats. They made a conscience choice to drink and I think that they or those that survive them need to just deal with that. I mean you make a bad choice the result may reflect that.

[DeltAlum]

Originally posted by AXWhoah
I'm tired of people getting hurt or killed while they're drunk from fraternity parties...

If we could stop your quote right there, we wouldn't have these problems and wouldn't be having this discussion.

Taking responsibility for oneself means drinking moderately, obeying the law and not putting yourself or anyone else in danger.

[AXWhoah]

Well of course, in a perfect world....but people are going to continue to drink to much and make other bad choices. All that I want is for people to start facing the reprocussions once they have made those bad choices.

[greeklawgirl]

It would be nice to have people be responsible enough to accept the consequences of their decisions. However when someone dies, the people left behind are saddened and angry. Its easier to blame someone--anyone--other than your dearly departed.
And when that "someone" happens to have deep pockets, even better.

For me, in a perfect world, we would be striving to live up to the ideals of our Founders every single day. Living up to our ideals includes obeying the law and our respective RM policies. The truth of the matter is that if that chapter of Lambda Chi Alpha hadn't been serving alcohol to minors, their name would never had been mixed up in this tragedy. All the parties involved need to step up and take some responsibility for their part in what happened. Unfortunately in this situation, that happens to include our fellow Greeks.

What a crying shame.

[Nhfulmer]

It is true that Lloyd's of London did not pay in the LXA case. My husband talked with Lloyds' rep at the Executive Board meeting of his own fraternity last week. The negotiations began at $18,000 and the settlement was $150,000 but IT WAS NOT PAID BY THE INSURANCE COMPANY for the reasons previously stated - the fraternity chapter was not covered because they had not adhered to the policies.

In answer to another post - yes, some fraternities do pass on the savings in insurance premiums to chapters who have had no incidents. Again, I am referring to my husband's fraternity. The chapters who have had incidents pay higher premiums and those who have had no incidents have their premiums reduced.

It is also my understand that Lloyds of London is going to have each member sign a statement that he understands that if he is violating the policy, he and his parents will be responsible if there is an incident and not the fraternity. And, yes, they do believe it will stand up in court.

[KappaKittyCat]

Lloyds of London is going to have each member sign a statement that he understands that if he is violating the policy, he and his parents will be responsible if there is an incident and not the fraternity.

Oh dear god! If that happened to me, nobody'd be able to sue me 'cuz they wouldn't be able to find the body! My parents would kill me!

[Nhfulmer]

Originally posted by KappaKittyCat
Oh dear god! If that happened to me, nobody'd be able to sue me 'cuz they wouldn't be able to find the body! My parents would kill me!

I think that may be part of their reasoning. Make it personal!!! I forgot to mention that this information will be sent to parents also. You really can't blame the insurance companies. They agree to take care of the groups as long as they follow the rules but when they don't, it's on the individual's shoulders! Same thing as your own insurance - if you set fire to your home, insurance is not going to pay -- if it is an accident, it will.

[DeltAlum]

Originally posted by Nhfulmer
You really can't blame the insurance companies.

Glad you wrote that, because that probably would have been the next direction the thread went.

Few people like insurance companies. Few understand how they operate -- or how insurance works.

In the end, though, they are businesses, just like the businesses that college students hope to work for and make a decent living. They're not charities. If they lose money, they don't survive.

So, if they have a high risk group to insure, the premiums are going to be high.

If fraternities want premiums to come down, they have to stop breaking the law/rules so the number of claims will diminish. It's as simple as that.

The above is dependent, of course, on whether fraternities can get insurance at all. The fact that we have to go to firms like Lloyds -- or form consortiums to self-insure speaks volumes about how high our risk is.

But we've been through that before.

[DeltAlum]

Originally posted by Nhfulmer
It is also my understand that Lloyds of London is going to have each member sign a statement that he understands that if he is violating the policy, he and his parents will be responsible if there is an incident and not the fraternity.

Sorry, one additional comment.

Undergraduates need to think about their future.

We hear so much about the burden of beginning life/career with huge student loans to repay.

What would it be like to have several hundred thousand dollars of debt stacked on top of that because of liability from a lawsuit?

Some parents may be able to cover that possibility, but mine couldn't have. Nor could we if one of our kids was in that situation.

Some dumb mistake now could ruin the rest of your life.

[Munchkin03]

I don't like the idea of the parent liability one bit. The vast majority of these men are over 18 and should understand the consequences of such behavior. Hell, I felt bad enough getting my parents to pay my tuition--and that was something that they had planned on paying! Imagine my embarassment if they had to pay for my mistakes as well...

[DeltAlum]

Originally posted by Munchkin03
I don't like the idea of the parent liability one bit. The vast majority of these men are over 18 and should understand the consequences of such behavior.

I agree, but clearly they don't realize the potential consequences -- or just plain don't care. Look at the record.

[Nhfulmer]

It doesn't matter what we like - in the case of a law suit, they are going after the person/people with the money and that definitely is not a college student! If the parents are still counting their child as a deduction on their tax return, then they are still responsible for him/her.