Fraternities Should Consider Reforming Insurance Practices ASAP

posted in: Nik Koulogeoge | 0

Here’s a scenario: A national fraternity, comprised of dozens or hundreds of student chapters of said fraternity, charters only those chapters which are appropriately insured. 

It may not sound different from today’s reality, but that subtle word change could revolutionize risk management within fraternities, even if it may result in short term losses. Here’s how simple it is to enforce:

  • Any chapter with insurance (and which meets other fundamental expectations) maintains it’s charter
  • Any chapter which loses its insurance is placed on suspension for a maximum number of months or until insurance is acquired
  • Any chapter which cannot agree to a new insurance policy within the permitted timeframe is disaffiliated from the national organization

Three guidelines which, if followed, eliminate much of the politics associated with closures of high-risk, though well-supported chapters.

These guidelines may also result in fewer chapters surviving on life support, fewer chapters destined for often ineffective “membership reviews,” and fewer questions as to whether a national office of 5-30 people is responsible for the actions of thousands of students spread across a continent.

When issues occur we witness a well-rehearsed string of actions take place: (1) Bad behavior is condemned, (2) policies are reiterated and reviewed, (3) programs to educate students on policies are put into place, (4) and the chapter may go some time with limited privileges.

Unfortunately, deaths due to hazing are reportedly on the rise, and our other problems haven’t disappeared. Perhaps it’s time to consider alternative, deeper, structural reforms.

I recently tweeted that 11 colleges/universities have enacted some form of fraternity/sorority community suspension/ban in 2017. Not all are the same, not all affect both fraternities and sororities, and many are not responses to specific incidents of risk but are precautions taken due to uncertainties.

A friend, former classmate and current fraternity/sorority professional responded – see below:

What will be the outcome of these sanctions and bans? Why did UCF’s first attempt at such a ban fail to bring about the desired results? Are surface-level policy changes enough to teach students to be accountable?

Fraternities Insure Their Chapters

Fraternities presently manage the insuring of their component chapters. Most institutions will require a fraternity offer a certain level of coverage to be recognized.

Many fraternities have since pooled their insurance efforts together to reduce costs and to better protect their respective futures. There are certainly benefits to this way of thinking – it likely has helped some fraternities lower the cost of insurance, but it may have run its course with regard to usefulness.

Recent incidents have caused certain fraternities’ insurance rates to skyrocket, and policies enacted at the national level can only do so much to stem the increase. In some cases, students pay $300 or more just for fraternity insurance. That’s not including their local dues to their chapter, dues to their inter/national organization and campus council (if applicable).

The caveat to these insurance policies is that they don’t cover chapters when a fraternity’s risk policies are broken. Few members are keenly aware of these guidelines, many of which are pulled from FIPG and others which are enforced at a campus-level. Few chapters strictly follow them. Examples include:

  • BYOB to social events (ex: 6 beers or 4 wine coolers)
  • Guest drinks are kept behind a table/bar & exchanged for drink tickets
  • Wristbands for attendees over the age of 21
  • Security & a bouncer checking ID’s
  • A specific guest list of attendees ready in advance of the event

There are more, but if your chapter doesn’t enforce those at every social function, it may not be covered by its fraternity policy if or when tragedy strikes.

To prevent this, fraternities spend large sums of money (as do campus communities and councils) to educate members on their policies. Those programs may make students aware of how to avoid disaster and lawsuits, but they are likely not the best practice we can possibly think of when it comes to mitigating unknown risk and teaching students to be accountable.

Penn State’s President cited a “zero-tolerance” policy toward hazing after a student passed earlier this year. Which begs the questions: “Was there no zero tolerance policy prior to the student’s death? If there was, what went wrong in enforcing it?”


Real Accountability

It’s time that fraternities engage in internal debates and dialogues regarding the manner in which their chapters are insured. Local fraternity and sorority chapters have and continue to acquire insurance and maintain a competitive rate of dues when compared to national groups at their institutions, so the idea that chapters acquire their own insurance is not unfeasible.

As mentioned earlier, requiring insurance at the chapter level frees up the national organization to spend resources more wisely, may reduce politics from the process of pulling a charter, and can create clearer guidelines for students/alumni to follow.

How would such a system work? I’m glad you’ve asked – I’ve been thinking about this for a little while. Here are some concepts to consider:

1. Chapters purchase insurance “across fraternity lines”

Say for example the 25 least risky chapters of 5 fraternities decide to pool together. Not only would they lower their individual rates by spreading the risk just as they do now with their headquarters, they also benefit from working with other chapters which do well to manage their risk.

Our most responsible chapters could organize lower insurance rates than they currently pay by partnering with other fraternities’ low risk chapters.

2. Students determine which policies they adopt to lower their insurance

Chapters would directly negotiate with insurance companies to lower their rates. The students may come to realize that BYOB saves them considerable cash, and may self-adopt such a policy. It doesn’t mean that a national/international organization wouldn’t have its own hazing/alcohol policies – they would just become simpler, enforceable policies.

That is how we teach accountability, “self government,” and student leadership. Policies which fraternity men and women presently scoff at may provide their best bet at maintaining affordable coverage. Drink tickets are no longer just a stupid rule from “nationals.”

3. High-Risk Chapters price themselves out of existence

If a high-risk chapter refuses to adopt cost-lowering policies and does not change its behavior (say for example by requesting a membership review), then it will inevitably get to a point where insurance is no longer affordable.

Some chapters are hard to close. They may generate a lot of revenue due to a large membership or certain alumni may contribute less time and money if their chapter were to close. In the case of self-insurance, high risk chapters either seek help from their school/headquarters to improve their chances for survival, or they lose insurance and their charter.

Placing the decision of reform into the hands of students may also result in better morale once those reforms have taken place.

4. Investigations improve in quality and bias-correction

It is difficult not to suspect the worst when the organization which insures you, makes the policies, and whose liability depends on if your members followed those policies is investigating an incident.

Fraternities and campus professionals may be freed up to better collaborate with students to work through significant issues. Additionally, lawyers eager to profit from heartbroken parents no longer have a giant pot of fraternity gold to turn to whenever a lawsuit becomes a possibility.

Any insurance collective of chapters across many fraternities or within an IFC are also likely to have rules related to their policies, meaning chapters may better watch out for one another and report when something is going wrong, and that those who move in to address the issues do not have the burden of financial liability on their shoulders.

5. There’s room to mix and match

Perhaps some chapters are still insured through their national. Perhaps those chapters which disagree with finer points of an organization’s risk policies have the option to pursue equivalent insurance of their own. Perhaps chapters which repeatedly violate fraternity policies are required to purchase insurance on their own or lose their charter.

There are likely ways to mix and match, and there are likely legalities I have not considered in making this point. We may not be able to move to a position where chapters universally insure themselves, but we may still experience benefits from a partial implementation of these ideas for reform, and that is worth pursuing.

What are your thoughts on fraternity insurance? If you’re a fraternity executive director or risk expert who’d like to chat or share some thoughts, connect through the contact form below:


December 2018This post has been updated for clarity related to the FIPG and how fraternity policies are put into place. Thank you for the feedback :).