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]

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By: | July 27, 2017 • 5 min read

R&I: What was your first job?

My first job was at the age of 15 as a cashier at a bakery. My first professional job was at Amtrak in the finance department. I worked there while I was in college.

R&I: How did you come to work in risk management?

A position opened up in risk management at Wawa and I saw it as an opportunity to broaden my skills and have the ability to work across many departments at Wawa to better learn about the business.

R&I: What is the risk management community doing right?

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The advancements in analytics are a success for the industry and offer opportunities for the future. I also find value in the industry focus on emerging and specialty risks. There is more alignment with experts in different industries related to emerging and specialty risks to provide support and services to the insurance industry. As a result, the insurance industry can now look at risk mitigation more holistically and not just related to traditional risk transfer.

R&I: What could the risk management community be doing a better job of?

Developing the talent to grow with the industry in specialization and analytics, but to also carry on the personal connections and relationship building that is a large part of this industry.

Nancy Wilson, director, quality assurance, risk management and safety, Wawa Inc.

R&I: What was the best location and year for the RIMS conference and why?

I have had successes at all of the RIMS events I have attended. It is a great opportunity to spend time with our broker, carriers and other colleagues.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I think the biggest challenge facing most companies today is related to brand or reputational risk. With the ever-changing landscape of technology, globalization and social media, the risk exposure to an organization’s brand or reputation continues to grow.

R&I: What emerging commercial risk most concerns you?

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The changing consumer demands and new entrants into an industry are concerning. This is not necessarily something new but the frequency and speed to which it happens today does seem to be different. I think that is only going to continue. Companies need to be prepared to evolve with the times, and for me that means new risk exposures that we need to be prepared to mitigate.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

I try to be optimistic about most things. I think the economy ebbs and flows for many reasons and it is important to always keep an eye out for signs of change.

R&I: What have you accomplished that you are proudest of?

I am fortunate to have opportunities professionally that make me proud, but I have to answer this one personally. I have two children ages 12 and 9 and I am so proud of the people that they are today. They both are hardworking, fun and kind. Nothing gives me a better feeling than seeing them be successful. I look forward to more of that.

R&I: What is your favorite book or movie?

This is really hard as there are too many favorites. I do prefer books to movies, especially if there is a movie based on a book. I find the movie is never as good. I have multiple books going at once and usually bounce back and forth between fiction and non-fiction.

R&I: What’s the best restaurant you’ve ever eaten at?

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I have eaten at a lot of different restaurants in many major cities but I would have to pick Horn O’ Plenty in Bedford, PA. It is a farm to table restaurant in the middle of the state. The food is always fresh and tastes amazing and they make me feel like I am at home when I am there. My family and I eat there often during our trips out that way.

R&I: What is your favorite drink?

I do love a good cup of coffee (working at Wawa helps that). I also enjoy a good glass of wine (red preferably) on occasion.

R&I: What is the most unusual/interesting place you have ever visited?

Vacations aside, I do get an opportunity to travel for work and visit our food suppliers. The opportunities I have had to visit back to the farm level have been a very interesting learning experience. If it wasn’t for my role, I would have never been able to experience that.

R&I: What is the riskiest activity you ever engaged in?

My husband, kids and I recently did a boot-camp-type obstacle course up in the trees 24 feet in the air. Although I had a harness and helmet on, I really put my fear of heights to the test. At the end of the two hours, I did get the hang of it but am not sure I would do it again.

R&I: If the world has a modern hero, who is it and why?

The first people that come to mind are those who are serving our country and willing to sacrifice their own lives for our freedom.

R&I: What about this work do you find the most fulfilling or rewarding?

Every day is different and I have the opportunity to be involved in a lot of different work across the company.

R&I: What do your friends and family think you do?

My husband and children have a pretty good sense of what I do, but the rest of my family has no idea. They just know I work for Wawa and sometimes travel.




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