Local Chapter Insurance

[lilvisabel]

Hi all,

I'm the president of a local chapter at a small liberal arts school with entirely local Greek organizations (with the exception of two national frats). Up until this year we have been covered under the university's liability insurance. The Greek organizations were recently informed that the university will be removing us from their insurance plan to save money, and we're now expected to find our own policies.
The higher-ups at the university are advising policies covering up to $5-10 million dollars in claims, which means we'd be paying thousands of dollars a year, and frankly that's money we just don't have. Our dues are only $300 a year, and that's already a pretty steep barrier to accessibility for a lot of people, and while we have a healthy bank account right now this new change would wipe it out within two years. All the chapters are facing the same problem - we don't have the resources of big national organizations.
All of our research into agencies that might provide this type of insurance at a reasonable cost has hit a dead end so far - every place we've found will only cover national organizations or is not communicating. The university's suggestions have been pretty much useless and consist mainly of "ask your alumni chapters to help" or "just recruit more people", and they haven't provided any other leads or advice. We've resorted to reaching out to other local chapters at other schools over Instagram and asking what they're doing.
This might be a long shot, but is there anyone here who might know about this kind of thing or know of an agency that covers local chapters? We're in the Midwest, if that's useful.

Thank you!

[FSUZeta]

Might the ultimate goal be for your chapters to affiliate with national orgs, or perhaps to make it difficult for your continued existence? Have your local sororities and fraternities explored becoming a new chapter of a national org?

It seems like you all realize the importance of having liability insurance-it’s a good thing that you do. Has anyone in any of the orgs reached out to a lawyer and/or local insurance agent or a risk management and insurance professor( if you have that major at your school). You might get some good advice from them.

[Kevin]

Insurance costs for fraternities are much higher than for sororities.

If you're going to have insurance, I can't tell you of any national organization where the cost of ownership remotely approaches anything as low as $300/year. $1,500 is what you'd see on the low end of things. That's not taking into account housing fees and any other costs. And insurance was always one of our biggest expenses.

[Titchou]

Reach out to Cindy Stellhorn at MJ Insurance in Indy. they won't cover you but, if anyone has an idea where you would have a ghost's chance of finding insurance, she would.

[ASTalumna06]

As someone who works as a commercial insurance underwriter, I can tell you that you may be SOL. In other words, yes, those premiums seem reasonable for the limits being requested. For $5M to $10M, you're looking at a General Liability policy at $1M per occurrence/$2M aggregate limits, plus an Umbrella policy for the additional limits. And yes, each of those policies will run you thousands of dollars a year.

And coverage for fraternities and sororities is very specialized and seen as a higher risk. You're only going to find so many brokers and carriers across the country that will even consider writing such a risk, let alone writing it for only one chapter of a local organization with no formal oversight.

For example, my company wouldn't provide liability coverage for a local, one-off donut shop for $3,000, but we would consider providing coverage for a chain of Dunkin Donuts for $500,000. And each DD location would end up at a lower rate and paying less overall than the local shop, simply due to the spread of risk.

But even a local donut shop could find coverage because they're not so specialized or an obscure risk. They may pay a relatively higher premium, but their operations are still mostly predictable, sales are auditable, and safety features can be analyzed. A sorority or fraternity is a whole different animal.

[Gamma Xi Phi]

Originally Posted by ASTalumna06

As someone who works as a commercial insurance underwriter, I can tell you that you may be SOL. In other words, yes, those premiums seem reasonable for the limits being requested. For $5M to $10M, you're looking at a General Liability policy at $1M per occurrence/$2M aggregate limits, plus an Umbrella policy for the additional limits. And yes, each of those policies will run you thousands of dollars a year.

And coverage for fraternities and sororities is very specialized and seen as a higher risk. You're only going to find so many brokers and carriers across the country that will even consider writing such a risk, let alone writing it for only one chapter of a local organization with no formal oversight.

For example, my company wouldn't provide liability coverage for a local, one-off donut shop for $3,000, but we would consider providing coverage for a chain of Dunkin Donuts for $500,000. And each DD location would end up at a lower rate and paying less overall than the local shop, simply due to the spread of risk.

But even a local donut shop could find coverage because they're not so specialized or an obscure risk. They may pay a relatively higher premium, but their operations are still mostly predictable, sales are auditable, and safety features can be analyzed. A sorority or fraternity is a whole different animal.

These are great analogies. Thank you.

[Kevin]

Originally Posted by ASTalumna06

But even a local donut shop could find coverage because they're not so specialized or an obscure risk. They may pay a relatively higher premium, but their operations are still mostly predictable, sales are auditable, and safety features can be analyzed. A sorority or fraternity is a whole different animal.

To build on that, local fraternities and sororities are more unpredictable than national organizations as national organizations have all sorts of policies to not only shield the national organization from liability, they ensure there's at least some programming on risk reduction, that there are policies in place which the insurer and the national organization can point to when they're broken as a reason to decline coverage, etc. They send out reps to meet the officers and alums, they provide training opportunities, and they have a sense of who their higher risk groups are. So they're kind of predictable.

I would expect it's pretty rare and difficult for a claim against a national organization to pay much if anything. You're going after the chapter and its assets and individuals.

Local organizations have none of those controls, and would be prone to changing completely in a short period of time. I'd kind of expect you to be uninsurable.
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[33girl]

This is a way to force you into going national or close completely while keeping their hands clean of any overt action. Extremely slimy on the university’s part.

If your practices are all more or less the same (ie none of the “fraternities can have alcohol in house but sororities can’t” ridiculousness) see if you can all be insured as one large group.

[ASTalumna06]

Originally Posted by 33girl

This is a way to force you into going national or close completely while keeping their hands clean of any overt action. Extremely slimy on the university’s part.

The university is covering their own a**, and I can't say I blame them.

If your practices are all more or less the same (ie none of the “fraternities can have alcohol in house but sororities can’t” ridiculousness) see if you can all be insured as one large group.

No no no.

First, look into the combinability issue with Named Insureds on a policy. There's a chance you wouldn't even be able to find insurance under one policy for multiple organizations.

But even if you could, would you want to? If you could skirt around the aforementioned obstacle (and maybe form one entity for which you all shared common ownership), you'd be tied to an insurance policy with organizations over which you have no control or oversight.

Therefore, if you as ABC Sorority is doing everything right and XYZ Sorority is doing everything wrong, you have no way to make them operate in the way you see fit, and if something goes wrong and there are claims, you'll find yourself paying for them in increased rates and premuims year over year. And even if you decide to break off onto your own policy later down the line, that claims/loss history will follow you.

This would create so many monetary and logistical nightmares which I can promise you are certainly not worth it.