Higher Education

Recipe for Claims: Frats and Booze

The stubborn embrace of alcohol by fraternities remains a prime source of expensive and potentially avoidable higher education claims.
By: | June 19, 2017 • 6 min read
Topics: Claims | Education | Liability

The insurance industry can and should exert its considerable financial influence to inhibit campus binge drinking, said Doug Fierberg, a Washington, D.C. attorney who represents victims of campus malfeasance.

Schools and their insurers could impose a single policy change — banning alcohol in fraternity housing — that would reduce, without cost, the risk of on-campus injury and death by 75 percent, and severity by more than 90 percent, said Fierberg, author of To End Fraternity Hazing, End Boozing First, published in 2012 in the Chronicle of Higher Education.

Doug Fierberg, partner, The Fierberg National Law Group

Most schools have written alcohol policies that abide by applicable laws, distributed to freshmen at orientation and thereafter ignored, Fierberg said.

That’s reasonably manageable in on-campus dormitories, which are usually owned by the institution, supervised by resident advisors and subject to campus and municipal policing.

Fraternity houses, however, are usually owned by their respective Greek organizations, often have no supervisory adult on the premises and are off-limits to campus police except under exigent circumstances.

Managing frats isn’t so easy, said Leta Finch, national leader, higher education practice, Aon Risk Solutions. “When an institution has a close relationship with a fraternity and can manage what goes on in its house, the insurer has greater leeway in terms of coverage, premiums and exclusions.”

“We suggest administrators ask, ‘Where are your reports coming from on Saturday night? A concert? A Greek house?’ Those are where risk managers need to focus.” — Mike Krackov, senior claims counsel, United Educators

In the absence of a close relationship between school and frat, however, the school creates an arms-length relationship with the fraternity, especially with regard to the liability associated with alcohol consumption, she said.

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A 1993 Harvard study found that 44 percent of college students binge drink, defined by the National Institute on Alcohol Abuse and Alcoholism as five or more drinks in about two hours for men, four or more for women.

Recent studies find that more students are partying harder now, “pre-gaming” and choosing hard liquor over beer. Many drink to the point of blacking out.

The Harvard study found students drank more on campuses with a strong drinking culture, few alcohol control policies on campus or in the surrounding community, weak enforcement, and easy accessibility through low prices, heavy marketing and special promotions.

Frats and Booze

According to a more recent Harvard study, fraternity residence or membership is the strongest predictor of binge drinking, and four of five students who live in fraternities are binge drinkers. Sororities no longer permit drinking on their premises.

Leta Finch, national leader, higher education practice, Aon Risk Solutions

The NIAAA reports more than 1,800 alcohol-related student deaths every year, another 600, 000 injuries and nearly 100,000 sexual assaults. One quarter of students say their academic performance has suffered from drinking.

Still, by tradition and articles of incorporation, “fraternities demand and colleges allow the model of self management by 18- to 22-year-olds who are unsupervised, mostly exempt from campus security, completely incapacitated, clouded by allegiance to their fraternity and brotherhood, or simply untrained in identifying and managing risk,” Fierberg said.

This model of risk management, or lack thereof, doesn’t exist in any other industry, he said.

Attempts to make fraternities dry, including those by the Greek industry, have been stymied by a student culture that sees drinking as a “basic right,” according to the Chronicle of Higher Education. Fraternities’ articles of incorporation grant self-management, and a change would require a supermajority vote.

Alcohol is deeply implicated in sexual assault cases; a 2015 United Educators study of its own claims found that 78 percent of sexual assaults involved alcohol.

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In one-third of all sexual assault claims UE studied, the victims were incapacitated, defined as drunk, passed out or asleep. Within that group, both the victim and the perpetrator had been drinking in 89 percent of cases.

The fact that most victims — overwhelmingly women — were under the influence when they were assaulted puts a chilling effect on colleges’ willingness to talk about alcohol in sexual assault cases, said George Dowdall, adjunct fellow, Center for Public Health Initiatives, University of Pennsylvania.

“That’s the third rail, the potential for victim blaming.”

Intractable Problem

Why haven’t insurance companies already advocated for dry fraternities and other mechanisms to limit access to alcohol?

It’s complicated.

Binge drinking ranks lower in the larger catalog of social problems because it’s legal at the age of 21, and alcohol is “totally acceptable” in American culture, said Greg Hunter, area managing director, Arthur J. Gallagher Risk Management Services Inc.

Mike Krackov, senior claims counsel, United Educators

While some carriers may decline to cover fraternities — or increase premiums or deductibles or exclude the risk from their policies — many carriers don’t see their role as heavy-handed influencers of social change. “Insurers are not the alcohol police,” he said.

Premiums have kept pace with risk, said Fierberg, and fraternities have passed through higher premiums in higher dues, which members are willing to pay, in part because they have no basis of comparison.

Ironically, he said, “parents’ homeowner’s insurance policies will likely pay for any litigation involving their sons because of exclusions in the fraternity policies, so it’s really the parents and homeowners’ insurers that are bearing the economic weight.”

Quantifying the problem is itself a problem, said Mike Krackov, senior claims counsel, United Educators, because binge drinking “crops up in unrelated claims,” including sexual assault, premises liability claims, travel abroad claims and personal injury claims.

However, said Hunter, “a large percentage of claims come from incidents on Friday or Saturday nights — party time.”

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The insurance industry doesn’t focus on drinking-related claims, said Hunter, in part because claims payments disguise the underlying cause of the claim.

For example, he said, “a hospital visit related to binge drinking will be paid by the health insurer. A drunk driving accident will be paid by the auto insurer.”

General liability and property insurance liability will kick in if there’s a fight in a dorm room, and workers’ compensation will pay for injury to an employee. None clearly relate back to excess alcohol consumption.

Educate the Educators

The reversal of any self-destructive social issue requires attacks from multiple communities — medical, law enforcement, administrative, educational — said Krackov. “To make an impact, we need training on culture change and bystander intervention. We start with incoming freshman and continue for the next four years.”

Greg Hunter, area managing director, Arthur J. Gallagher Risk Management Services

However, education on responsible drinking should start even younger, said Krackov. By the time students have reached the legal drinking age, it’s already too late. Better to start in middle school, when most students start health-ed classes. This lays the groundwork for later training in high school and college.

Carriers could sponsor some of this, divert some of their advertising spend to middle school alcohol education, Hunter said, but they “don’t see revenue generation as the result of educating people about binge drinking.”

United Educators’ mission includes educating its member-owners, two-thirds of which are institutions of higher education, said Krackov. Its risk management programs include a widely viewed “Know Your Limit” online alcohol usage assessment for college students and “Alcohol and You” for middle and high school students.

United Educators also provides risk management analytic tools, such as checklists for planning campus events, blogs, podcasts and claims studies. “We suggest administrators ask, ‘Where are your reports coming from on Saturday night? A concert? A Greek house?’ Those are where risk managers need to focus.”

But education alone isn’t enough, according to the Journal of Higher Education, as the binge drinking crisis deepens in spite of earnest attempts to curb it.

“The message isn’t what changes behavior,” said Robert F. Saltz, a senior research scientist at the Prevention Research Center. “Enforcement changes behavior.”

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

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R&I Profile

Achieving Balance

XL Catlin’s Denise Balan stays calm and focused when faced with crisis.
By: | January 10, 2018 • 6 min read

In the high-stress scenario of kidnap or ransom, the first image that comes to mind isn’t necessarily a yoga mat — at least, not for most.

But Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin, who practices yoga every day, would swear by it.

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“I looked at these opposing aspects of my life,” she said. “Yoga is about focus, balance, clarity of intent. In a moment of stress, how do you respond? The more clarity and calmness you maintain, the better positioned you are to provide assistance in moments of crisis.

“Nobody wants to be speaking to a frenetic person when either dealing with a dangerous situation or planning for prevention of a situation,” she added.

“There’s a poem by [Rudyard] Kipling on that,” added Balan’s colleague Ben Tucker. “What it boils down to is: If you can remain calm, you can manage through a crisis a lot better.”

Tucker, who works side by side with Balan as head of U.S. terrorism and political violence, XL Catlin, has seen how yoga influences his colleague.

“The way Denise interacts with stakeholders in this process — she is very professional and calm in the approach she takes.”

Yin and Yang

Sometimes seemingly opposite or contrary forces may actually be complementary and interconnected. In Balan’s life, yoga and K&R have become her yin and yang.

She entered the insurance world after earning a juris doctor degree and practicing law for a few years. The switch came, she said, when Balan realized she wasn’t enjoying her time as a commercial litigator.

Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

In her new role, she was able to use her legal background to manage litigation at AIG, where her transition from law to insurance took place. She started her insurance career in the environmental sector.

In a chance meeting in 2007, Balan met with crisis management underwriters who told her about kidnap and ransom products.

She was hooked.

Because of her background in yoga, Balan liked the crisis management side of the job. Being able to bring the calmness and clearness of intent she practiced during yoga into assisting clients in planning for crisis management piqued her interest.

She then joined XL Catlin in July 2013, where she built the K&R team.

As she became more immersed in her field, Balan began to notice something: The principles she learned in yoga were the same principles ex-military and ex-law enforcement practiced when called to a K&R-related crisis.

She said, “They have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.”

“K&R responders have a warrior mentality — focus, purpose, strength and logic — and I would say yoga is quite similar in discipline.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Many understand yoga to be, in itself, one type of meditation, but yoga actually encompasses a group of physical, mental and spiritual practices. Each is a discipline. Some forms of yoga focus on movement and breathing, others focus on posture and technique. Some yoga is meant to relax the mind and create a sense of calmness; other yoga types make participants sweat.

After having her second child and working full-time, Balan wanted to find something physical and relaxing for herself; a friend suggested yoga. During her first lesson, Balan said she was enamored with it.

“I felt like I’d done it all my life.”

She dove into the philosophy of yoga, adopting the practice into her daily routine. Every morning, whether Balan is in her Long Island home or on a business trip, she pulls out her yoga mat to practice.

“I always travel with my mat,” she said. “Daily practice is the simplest form of connection to routine to maintain my balance — physically and mentally.”

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She said the strangest place she has ever practiced was in Lisbon. She was on a very narrow balcony with a bird feeder swarming with sparrows overhead.

After years of studying and practicing, Balan is considered a yogi — someone who is highly proficient in yoga. She attends annual retreats with her yoga group, where she is able to rejuvenate, ready to tackle any K&R event when she returns.

In 2016, Balan visited Tuscany, Italy, where she learned the practice of yoga nidra, a very deep form of meditation. It’s described as the “going-to-sleep stage” — a type of yoga that brings participants to a state of consciousness between waking and sleeping.

“It awakens a different part of your brain,” Balan commented. “Orally describing it doesn’t quite do it justice. One has to practice Nidra to fully understand the effect it has on your being.”

Keeping a level head during a crisis is key in their line of business, Tucker said. He can attest to the benefit of having a yogi on board.

“I’ve seen her run table-top exercises where there is this group of people in a room and they run an exercise, a simulation of a kidnap incident. Denise is very committed to what we’re doing,” said Tucker.

“She brings that energy. She doesn’t get flustered by much.”

Building a K&R Program

When Balan joined XL Catlin, she was tasked with creating the K&R team.

Balan during a retreat in Sicily, Italy, 2017

She spent time researching and analyzing what clients would want in their K&R coverage. What stuck out most to Balan was the fact that, in these situations, the decision to purchase kidnap and ransom cover is rarely made because of desire for reimbursement of money.

“I asked why people buy this type of coverage. The answer was for the security responders,” she said.

“These are the people who sit with the family. They’re similar to psychologists or priests,” Balan further explained. “Corporations can afford to pay ransom. They buy [K&R] because it gives them access to these trained and dedicated professionals who not only provide negotiation advice, but actually sit with a victim’s family, engaging deep levels of emotional investment.”

“I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” — Denise Balan, senior VP and head of U.S. kidnap & ransom, XL Catlin

Balan described these responders as people having total clarity of purpose, setting their intentions to resolve a crisis — a practice at the very heart of yoga. She knew XL Catlin’s new kidnap program would put stock in their responders.

“I’ve worked closely with the responders to better understand what they can do for our clientele. These are the people who run into danger — warrior hearts married to dedication to our clients’ best interests.”

But K&R is more than fast-paced crisis and quick thinking; Balan also spent a good deal of time writing the K&R form and getting the company’s resources in order. This was a huge task to tackle when creating the program from the ground up.

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“A lot of my day-to-day is speaking with brokers and finding ways to enhance our product,” she said.

After a few months, she was able to hire the company’s first K&R underwriter. From there, the program has grown. It’s left her feeling professionally rewarded.

“People don’t often get that opportunity to build something up from scratch,” she said. “It’s been an amazing experience — rewarding and fun.”

“She brings groups of people together,” said Tucker. “She’s created a positive environment.”

Balan’s yogi nature extends beyond the office walls, too. Her pride and joy, she said, are her kids. And while it may seem like two large parts of her life are opposite in nature, Balan’s achieved balance through her passions.

“[Yoga] has given me the ability to see beyond only one aspect of any situation” she said. “I’ve learned to appreciate all moments in life — one at a time. The ability to think clearly and calmly guides my work, my practice and my personal life.” &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]