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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The Profession

For This Pharmaceutical Risk Director, Managing Risk Means Being Part of the Mission to Save Lives

Meet Eric Dobkin, director, insurance and risk management, for Merck & Co. Inc.
By: | September 28, 2018 • 5 min read

R&I: What was your first job?
My first job out of undergrad was as an actuarial trainee at Chubb.I was a math major in school, and I think the options for a math major coming out are either a teacher or an actuary, right? Anyway, I was really happy when the opportunity at Chubb presented itself. Fantastic company. I learned a lot there.

R&I: How did you come to work in risk management?
After I went back to get my MBA, I decided I wanted to work in corporate finance. When I was interviewing, one of the opportunities was with Merck. I really liked their mission, and things worked out. Given my background, they thought a good starting job would be in Merck’s risk management group. I started there, rotated through other areas within Merck finance but ultimately came back to the Insurance & Risk Management group. I guess I’m just one of those people who enjoy this type of work.

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R&I: What is risk management doing right?
I think the community is doing a good job of promoting education, sharing ideas and advancing knowledge. Opportunities like this help make us all better business partners. We can take these ideas and translate them into actionable solutions to help our companies.

R&I: What could the risk management community be doing a better job of?
I think we have made good advancements in articulating the value proposition of investing in risk management, but much more can be done. Sometimes there is such a focus on delivering immediate value, such as cost savings, that risk management does not get appropriate attention (until something happens). We need to develop better tools that can reinforce that risk management is value-creating and good for operational efficiency, customers and shareholders.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
I’d actually say there hasn’t been as much change as I would have hoped. I think the industry speaks about innovation more often than it does it. To be fair, at Merck we do have key partners that are innovators, but some in the industry are less enthusiastic to consider new approaches. I think there is a real need to find new and relevant solutions for large, complex risks.

R&I: What emerging commercial risk most concerns you?
Cyber risk. While it’s not emerging anymore, it’s evolving, dynamic and deserves the attention it gets. Merck was an early adopter of risk transfer solutions for cyber risk, and we continue to see insurance as an important component of the overall cyber risk management framework. From my perspective, this risk, more than any other, demands continuous forward-thinking to ensure we evolve solutions.

R&I: What’s the biggest challenge you’ve faced in your career?
Sticking with the cyber theme, I’d say navigating through a cyber incident is right up there. In June 2017, Merck experienced a network cyber attack that led to a disruption of its worldwide operations, including manufacturing, research and sales. It was a very challenging environment. And managing the insurance claim that resulted has been extremely complex. But at the same time, I have learned a tremendous amount in terms of how to think about the risk, enterprise resiliency and how to manage through a cyber incident.

R&I: What advice might you give to students or other aspiring risk managers?
Have strong intellectual curiosity. Always be willing to listen and learn. Ask “why?” We deal with a lot of ambiguity in our business, and the more you seek to understand, the better you will be able to apply those learnings toward developing solutions that meet the evolving risk landscape and needs of the business.

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R&I: What role does technology play in your company’s approach to risk management?
We’re continuing to look for ways to apply technology. For example, being able to extract and leverage data that resides in our systems to evaluate risk, drive efficiencies and make things like property-value reporting easier. We’re also looking to utilize data visualization tools to help gain insights into our risks.

R&I: What are your goals for the next five to 10 years of your career?
I think, at this time, I would like to continue to learn and grow in the type of work I do and broaden my scope of responsibilities. There are many opportunities to deliver value. I want to continue to focus on becoming a stronger business partner and help enable growth.

R&I: What is your favorite book or movie?
I’d say right now Star Wars is top on my list. It has been magical re-watching and re-living the series I watched as a kid through the eyes of my children.

R&I: What is the riskiest activity you ever engaged in? When I was about 15, I went to a New York Rangers versus Philadelphia Flyers game at the Philadelphia Spectrum. I wore my Rangers jersey. I would not do that again.

Eric Dobkin, director, insurance & risk management, Merck & Co. Inc

R&I: What is it about this work you find most fulfilling or rewarding?
I am passionate about Merck’s mission of saving and improving lives. “Inventing for Life” is Merck’s tagline. It’s funny, but most people don’t associate “inventing” with medicine. But Merck has been inventing medicines and vaccines for many of the world’s most challenging diseases for a long time. It’s amazing to think the products we make can help people fight terrible diseases like cancer. Whatever little bit I can do to help advance that mission is very fulfilling and rewarding.

R&I: What do your friends and family think you do?
Ha! My kids think I make medicine. I guess they think that because I work for Merck. I suppose if even in a small way I can contribute to Merck’s mission of saving and improving lives, I am good with that. &




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]