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Colleges crack down on fraternities after wave of highly publicized misconduct

Problems puts focus on risk

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Colleges crack down on fraternities after wave of highly publicized misconduct

Recent highly publicized examples of fraternity sexual misconduct, hazing abuses and racial hostility have renewed concerns among college administrators about managing the risks and prompted a tougher stance.

Schools and national fraternity organizations have suspended or closed numerous chapters in the past month as instances of underage drinking, sexual misconduct and hazing abuse have come to light, often documented on social media. More than two dozen fraternity chapters have been suspended or shut down this year for alleged misconduct, according to news reports.

“Colleges have always had kind of a strained relationship with fraternities,” said Gary W. Langsdale, university risk officer at Pennsylvania State University in State College, Pennsylvania. “There's always been a challenge” in determining how much administrators can or should do to regulate fraternities.

“Schools have always been concerned about these situations,” said John Schwartz, senior risk management consultant at United Educators Insurance, a Reciprocal Risk Retention Group in Bethesda, Maryland. “I think they're as concerned as they've ever been.”

But fraternities, including the Indianapolis-based North-American Interfraternity Conference and the National Panhellenic Conference, are pushing back. The groups are lobbying Congress for due process protections for accused perpetrators in campus investigations, including the right to legal counsel and to question witnesses. The groups also argue that colleges should suspend disciplinary proceedings while authorities investigate alleged misconduct.

Colleges have had to deal with a rising tide of federal regulation in recent years, including Title IX rules barring discrimination and sexual harassment; the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, which requires reporting of campus crimes; and the Campus Sexual Violence Elimination Act, a 2013 amendment to the Clery Act mandating prevention education and setting disciplinary proceeding standards.

A bill now pending in Congress, the Campus Accountability and Safety Act, would require schools to post crime statistics on their websites, reach agreements with law enforcement agencies on handling sexual violence complaints and appoint confidential advisers to assault victims.

In one highly publicized recent case, the University of Virginia chapter of Phi Kappa Psi said it plans to sue Rolling Stone magazine over a story alleging a gang rape at the fraternity, following a police investigation that found no evidence to support the allegations.

While it appears the Greek organization may have been the victim of overzealous reporting, the fraternity system in general has come under fire for sexual assault and other misdeeds.

Sexual assaults, the most common violent offense on campus, rose to 6,016 in 2013 from 4,949 in 2012, according to the U.S. Department of Education.

Some 90% of sexual assault victims know the perpetrator, according to United Educators Insurance data released in January. While United Educators found that fraternity members are no likelier to be accused of sexual assault than other students, fraternity members and student athletes were involved more often in serial and multiple-perpetrator assaults.

“Our review of these claims suggests a subculture within some fraternities and (sports) teams that promotes hypermasculinity, sexual aggression and excessive alcohol consumption,” according to the study.

The general liability market for colleges “is not soft,” particularly for primary and lead umbrella layers up to $25 million, said Mark Turkalo, senior vice president and national education placement leader at Marsh L.L.C. in New York. Total general liability limits for colleges can reach $50 million to $100 million, with pricing flat to up single digits in recent renewals, according to Marsh.

Claim severity has been an issue for underwriters, who are concerned about fraternity as well as security guard exposures and athletic injuries, Mr. Turkalo said.

Risk management sources say incidents of fraternity misconduct may not be more frequent than in the past, but the incidents are more visible, more frequently reported and could result in more severe claims.

“Social media has made it easier for incidents of bad behavior to come to light,” Mr. Langsdale said.

“Twenty years ago, things happened on campus that you never heard about,” said Teena Hostovich, executive vice president at Lockton Cos. L.L.C. in Los Angeles. “It was more or less swept under the rug.”

In recent years, though, universities have improved federal safety law compliance and been more active in addressing fraternity exposures, experts say.

While freshman orientation often features education about alcohol abuse and sexual harassment, some colleges are requiring frat members to undergo the training annually, said John McLaughlin, managing director of the higher education practice at Arthur J. Gallagher & Co. in Itasca, Illinois.

Colleges also may require fraternities to register parties and describe how they plan to manage them. The institutions need to put the “onus of risk management” on fraternities. “They need to be part of the solution,” he said.

Some fraternities are taking their own steps.

James R. Favor & Co., an Aurora, Colorado-based managing general underwriter owned by several fraternities, established the Fraternal Health & Safety Initiative that includes training on prevention of sexual and relationship misconduct, binge drinking and hazing, said Marc Mores, a Favor executive vice president.

One Favor client, Oxford, Ohio-based Phi Delta Theta, launched an alcohol-free housing policy for its chapters in 2000, he said Phi Delta Theta's liability claims frequency dropped and its annual total losses fell from an average $413,000 before the policy change to an average $25,000 since, Mr. Mores said.

The liability market for fraternities is extremely tight and coverage for chapters is limited, insurance sources agree. The Lloyd's of London form used by Favor, for example, does not cover individual members — and in some cases local chapters — for liabilities arising from sexual misconduct, hazing, and violations of fraternity alcohol or drug policies.