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Shouldering the risk of thousands of college kids

Throughout his first semester at Northern Illinois University, 19-year-old finance major David Bogenberger tweeted about laser tag, a friend’s “rockin vball body” and his math professor. His last tweet showed a jack o’ lantern on a toilet seat: “happy halloween from the stevenson 7th floor bathroom.” A regular volunteer at his church, he was a wholesome guy.

On November 2 of that year, David went to a pledge party at the Pi Kappa Alpha frat house on campus. Pledges went from room to room, where fraternity brothers pressured them to down shots. David, according to police estimates, drank about 26 shots of vodka in ninety minutes, and after he passed out, fraternity brothers dragged him to an empty room where he was found dead the next morning, surrounded by empty cups and bottles. The coroner’s report revealed he died of cardiac arrhythmia, and intoxication contributed “significantly to his death.”

The Pi Kappa Alpha chapter at NIU was suspended, 22 members were charged with felony or misdemeanor hazing, and the Bogenberger family brought a wrongful death lawsuit against the fraternity, its 40-odd members plus the university.

“I would say that over 70 percent of all our claims have some connection back to alcohol, whether that’s a primary or secondary causation,” says Marc Mores, executive vice-president of James R. Favor & Co., a brokerage specializing in fraternity insurance and owned by seven fraternities.

Since the drinking age in the United States is 21, most frat members can’t legally imbibe, and “one of the [fraternities’] key policies is to make sure you’re following the state laws as they’re associated with alcohol and drugs,” says Mores. Fraternity brothers who violate policy are often excluded from coverage. Although partially purchased with each brother’s dues, policies are chosen by national headquarters and are designed to protect the organization, not individual members. So if a 20-year-old gets plastered at a frat bacchanal and falls off the roof, most policies won’t pay out. There are also exclusions when it comes to sexual assault. “The rule of thumb,” says Mores, “is if you violate a fraternity policy, then there’s no coverage for you as an individual.”

Sister Act

Coverage for sororities, on the other hand, is often much more generous, even when claims come from underage drinking.“If something happened and someone was hurt, of course the claim would be paid, based upon the liability and negligence of the sorority,” says Cindy Stellhorn, executive vicepresident of MJ Insurance, a brokerage specializing in sorority coverage. Stellhorn “can’t imagine that I, as a broker, would attempt to work with the underwriter to negate coverage in any way, or to change provisions.”

But there are two major exclusions to sororities’ policies—child abuse and intentional harm. And if alcohol-related claims become overarching trends instead of isolated events, “there would have to be some more punitive approach to their coverage and pricing and risk management.”

But sororities see far fewer claims involving alcohol. While “there would be some common threads [between women and men’s fraternities],” Stellhorn says, “…in many respects, it’d probably be easier for me to write the insurance for an oil refinery.”

As it happens, the National Panhellenic Conference, the umbrella organization for American sororities, insists all member organizations maintain alcohol-free housing. “I won’t sit here and say categorically no one has alcohol in the sorority chapter houses,” says Stellhorn. “But I can say that there are no events at the chapter house where alcohol is being served.”

Some fraternities also adopt alcohol-free housing. “So if that individual chapter wants to have a party with alcohol, then they put it in the hands of that third-party vendor,” says Mores. “That has dramatically reduced the frequency and severity of claims of that organization… and that’s one of the things that we’re starting to really promote to our other clients…”

Those chapters only serve alcohol at offsite venues with licensed bartenders and security teams. Not only does that prevent damage to chapter houses, but it allows for risk transfer—liability claims could be shared with the venue’s insurers—which is also essential when the Greek letter crowd plans certain adventures.

Some activities are obviously risky; Mores mentions a paintballing claim where a fraternity brother was wearing the proper equipment but “he stood up and his goggles got caught in a branch and he got hit in the eye with a paintball.” For the most part, however, paintball facilities carry liability coverage. Simple hayrides, on the other hand, often do not. While the actual activity isn’t dangerous, argues Cindy Stellhorn, “when you have no one else to sue, then that becomes a more difficult situation.”

“…Don’t do mechanical bulls”

While MJ Insurance and James R. Favor discourage their clients from participating in high-risk activities, they don’t forbid them. Ultimately, it’s up to each organization’s headquarters to set policies. Mores says if a frat banned mechanical bull riding and guests at a chapter party got hurt while doing so, insurance wouldn’t cover it. But if the national body had okayed an activity, insurance could pay out.

Once again, sorority insurance is more lenient. “Our messaging to the chapters is: don’t do mechanical bulls,” says Stellhorn. But if they did, and a guest got hurt, “then of course I would want the policy to extend to that. There, again, the insurance policy filter is far wider than the risk management filter that we would like for our clients to apply.”

Stellhorn points out that coverage gets confusing when a sorority member is injured. The young women are protected from third-party liability but they could also sue a sister or the organization for causing a situation that led to her injury. If, for example, a member tripped down a messy and poorly lit staircase in a chapter house, “there could be a pretty reasonable argument that there was negligence,” says Stellhorn. “That both the house corporation who was responsible for the lighting and then the other chapter members who were responsible for keeping the [passageway] open were negligent in their duties.”

Risk management for Greek organizations also includes teaching members about safe living—and partying—at college. Last September, James R. Favor launched the Fraternal Health and Safety Initiative to help “members to address the most pressing social issues facing college campuses today,” says Mores. “Things such as sexual assault and misconduct, binge drinking and hazing.” The company trains fraternity staff and alumni volunteers, who in turn facilitate discussions at each chapter, and “our clients have educated tens of thousands of undergraduates so far,” says Mores, though it’s too early to tell what impact the program has on the frequency and severity of claims.

As for David Bogenberger, his family’s civil lawsuit was dismissed in December 2014. The judge ruled social hosts can’t be held liable with regard to alcohol, and the family attorney failed to prove intoxication was a requirement for fraternity membership. But David’s death led to the largest hazing prosecution in American history, with 22 Pi Kappa Alpha brothers found guilty this past May. Yet when it came down to it, all were convicted of simple misdemeanors for leaving a drunk young man to die alone. All were ordered to perform 100 hours of community service and spend 24 months on supervision or conditional discharge. Their fines varied from $500 to $1,000.

“Nothing can bring him back,” David’s father Gary Bogenberger told reporters after the sentencing. “We realize that.” The family, he said, has one wish, “that his death would stand for something, some small catalyst of change; this use of alcohol as a weapon of choice in fraternity hazings is getting out of hand.”

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Copyright 2015 Rogers Publishing Ltd. This article first appeared in the August 2015 edition of Canadian Insurance Top Broker magazine