Welcome Back to Chapter 2 – David J. Easlick, Jr. – August 7, 2022
The “National” Fraternities are in the unique situation that they, as unlikely defendants, maintain millions of dollars of most likely unneeded insurance coverage entirely paid for by someone else. This is while undergraduate chapters, who pay 100% of the premium, are marginally covered or not covered at all by policies negotiated by the Nationals.
The result is that millions are collected with little or nothing allocated to pay for the murders and injuries suffered by the increasing number of victims of fraternity-caused death and destruction!
FIPG, INC. RISK MANAGEMENT POLICY MANUAL
This was included in the FIPG (Fraternity Insurance Purchasing Group, later changed to Fraternity Information Providing Group.
FIPG was a non-profit corporation in which individual National Fraternities joined and paid nominal annual dues. The key element for FIPG is the FIPG Risk Management policy which was periodically reviewed and modified based upon legal experience of the members.
Initially, it was an assumption of risk by the nationals from the chapters that mandated a risk management program from on top designed by older adults with no buy-in from the undergraduates. Nobody had the staff at that time to enforce such a creation. Risk Management Policy from Manual:
The Risk Management Policy of FIPG, Inc. includes the provisions, which follow and shall apply to all fraternity entities and all levels of fraternity membership.
ALCOHOL AND DRUGS
1. The possession, sale, use or consumption of ALCOHOLIC BEVERAGES, while on chapter premises or during a fraternity event, in any situation sponsored or endorsed by the chapter, or at any event an observer would associate with the fraternity, must be in compliance with any and all applicable laws of the state, province, county, city and institution of higher education, and must comply with either the BYOB or Third Party Vendor Guidelines.
2. No alcoholic beverages may be purchased through or with chapter funds nor may the purchase of same for members or guests be undertaken or coordinated by any member in the name of or on behalf of the chapter. The purchase or use of a bulk quantity or common source(s) of alcoholic beverage, for example, kegs or cases, is prohibited.
3. OPEN PARTIES, meaning those with unrestricted access by non-members of the fraternity, without specific invitation, where alcohol is present, are forbidden.
4. No members, collectively or individually, shall purchase for, serve to, or sell alcoholic beverages to any minor (i.e., those under legal drinking age).
5. The possession, sale or use of any ILLEGAL DRUGS or CONTROLLED SUBSTANCES while on chapter premises or during a fraternity event or at any event that an observer would associate with the fraternity is strictly prohibited.
6. No chapter may co-sponsor an event with an alcohol distributor or tavern (tavern defined as an establishment generating more than half of annual gross sales from alcohol) at which alcohol is given away, sold or otherwise provided to those present. This includes any event held in, at or on the property of a tavern as defined above for purposes of fundraising. However, a chapter may rent or use a room or area in a tavern as defined above for a closed event held within the provisions of this policy, including the use of a third party vendor and guest list. An event at which alcohol is present may be conducted or co-sponsored with a charitable organization if the event is held within the provisions of this policy.
7. No chapter may co-sponsor, co-finance or attend or participate in a function at which alcohol is purchased by any of the host chapters, groups or organizations.
8. All recruitment or rush activities associated with any chapter will be non-alcoholic. No recruitment or rush activities associated with any chapter may be held at or in conjunction with a tavern or alcohol distributor as defined in this policy.
9. No member or pledge, associate/new member or novice shall permit, tolerate, encourage or participate in “drinking games”. The definition of drinking games includes but is not limited to the consumption of shots of alcohol, liquor or alcoholic beverages, the practice of consuming shots equating to one’s age, “beer pong”, “century club”, “dares” or any other activity involving the consumption of alcohol which involves duress or encouragement related to the consumption of alcohol.
10. No alcohol shall be present at any pledge/associate member/new member/novice program, activity or ritual of the chapter. This includes but is not limited to activities associated with “bid night”, “big brother/big sister night” and initiation.
HAZING
No chapter, colony, student or alumnus shall conduct nor condone hazing activities. Hazing activities are defined as: “Any action taken or situation created, intentionally, whether on or off fraternity premises, to produce mental or physical discomfort, embarrassment, harassment, or ridicule. Such activities may include but are not limited to the following: use of alcohol; paddling in any form; creation of excessive fatigue; physical and psychological shocks; quests, treasure hunts, scavenger hunts, road trips or any other such activities carried on outside or inside of the confines of the chapter house; wearing of public apparel which is conspicuous and not normally in good taste; engaging in public stunts and buffoonery; morally degrading or humiliating games and activities; and any other activities which are not consistent with academic achievement, fraternal law, ritual or policy or the regulations and policies of the educational institution or applicable state law.”
SEXUAL ABUSE AND HARASSMENT
The fraternity will not tolerate or condone any form of sexist or sexually abusive behavior on the part of its members, whether physical, mental or emotional. This is to include any actions which are demeaning to women or men, ranging from but not limited to verbal harassment to sexual assault by individuals or members acting together.
FIRE, HEALTH AND SAFETY
1. All chapter houses should meet all local fire and health codes and standards.
2. All chapters should post by common phones and in other locations emergency numbers for fire, police and ambulance and should have posted evacuation routes on the back of the door of each sleeping room.
3. All chapters should comply with engineering recommendations as reported by the insurance company or municipal authorities.
4. The possession and/or use of firearms or explosive devices of any kind within the confines and premises of the chapter house is expressly forbidden.
5. Candles should not be used in chapter houses or individual rooms except under controlled circumstances such as initiation.
EDUCATION
Each fraternity shall annually instruct its students and alumni/alumnae in the Risk Management Policy of FIPG, Inc. Additionally, all students and key volunteers shall annually receive a copy of the Risk Management Policy and a copy of the policy shall be available on the fraternity website.
A complete copy of the Risk Management Manual may be found on the Resources Section of my webpage https://www.thefraternityexperts.com/ .
FIPG was a non-profit corporation which individual National Fraternities joined and paid nominal annual dues. The key element for FIPG is the FIPG Risk Management policy which was periodically reviewed and modified based upon legal experience of the members.
Initially, it was an assumption of risk by the nationals from the chapters that mandated a risk management program from on top designed by older adults with no buy-in from the undergraduates. Nobody had the staff at that time to enforce such a creation.
Insurance becomes “Control”
Over time, insurance for specific chapters became no longer available. The insurance companies, if they would grant coverage at all, mandated coverage for all chapters and Nationals as one package. Increasingly the FIPG risk management policy from the top down was mandated to obtain coverage.
For the first time in the Twentieth Century, Nationals gained control over the chapters. The schools would not allow a fraternity on its campus without liability insurance and a risk management code at least equal to FIPG. The only way to do this was with the Nationals in control. The industry changed from a basically broke powerless group to having total control over the undergraduate chapters.
The control increased as 17 of the Nationals set up their own offshore reinsurance company known as Fraternity Risk Management Trust which they domesticated in 2003 to Vermont. Now, liability insurance premiums plus a substantial excess was billed to the individual undergraduate to cover the National Policy. This resulted in a huge surplus to the Nationals allowing to raise executive payroll, hire more consultants and other staff and put emphasis on rapid expansion.
Despite 100% of the revenue coming from the undergraduates, the overwhelming amount of insurance is on the Nationals. The chapters were covered by smaller eroding policies or no coverage at all! If the undergraduates failed to pay, the chapter was expelled after remedies such as fines were first tried.
FIPG becomes a campus standard
The FIPG standards grew and grew. The momentum was there. Under the prodding of the North American Fraternity Conference (NIC) a campus project directed by Craig Peterson, Director of Campus Services, NIC, developed into Interfraternity Councils (IFCs) on campuses adopting the FIPG program as campus standards. This was pushed by the Association of Fraternity Advisors (AFA) the trade association of the campus Greek Life staff.
All of the liability insurance premium dollars plus a large surplus “risk management fee” are paid directly by the undergraduates. The undergraduates actually have very little coverage and the National and other alumni entities who pay nothing have the rest. This is top down insurance paid for from the bottom up.
All entities under the national blanket, headquarters, foundations, regionals, alumni, housing corporations, local chapters and members are all covered to a certain extent. The primary funding source is an annual payment from each undergraduate member. This is the means by which the nationals got control of the chapters, which historically had been local, fairly autonomous, entities.
The premium is divided by the expected chapter population and assessed to each chapter on a per man premium amount. This is collected from all active members and pledges and used to pay the insurance premium and the self-insured retention. The key purpose of this arrangement as discussed in the FIPG Manual, was to protect the Nationals from behavior of the chapters and individuals associated with the chapters.
Somewhere in the very fine print of the Risk Management Plan of the National, the sad reliance on parental home-owners’ insurance policy can be found. This fact would be disclosed to the 18-year-old pledge of the fraternity, not the parent who was paying the bill and thought the substantial charge was for insurance for the chapter. The parents surprisingly find themselves in the soup for their homeowners policy to come into the picture.
FRMT Membership
There are currently 32 members in FRMT. Membership is by election of the current members. Letters of support from board members of the applicant are required, and a sponsor is named to shepherd the application through the process. There is extensive analysis of the loss ratios and experience of the applicant. There are various reporting requirements and Kirklin’s group figures the annual reserves and premium for each member group and notifies each fraternity at the Annual Meeting of the FEA (Fraternity Executives Association). Billing is in the fall based upon a chapter census submitted by each member and payable in a variety of options.
The premium is divided by the expected chapter population and assessed to each chapter on a per man premium amount. This is collected from all active members and pledges and used to pay the insurance premium and the SIR. The key purpose of this arrangement was to protect the Nationals from behavior of the chapters and individuals associated with the chapters, while eliminating the chapters as a true collectible source of the liability.
James R Favor Ltd.
According to its web site, “After working for a major underwriting company and national insurance brokerage firm, James R. Favor founded the company in 1979. To continue and further the company’s leadership in the field of fraternity and sorority Risk Management & Insurance programs, the company was acquired by a group of national fraternities in 2006.
Our principal area of focus is the collegiate Greek community. The firm’s area of concentration involves the development, marketing, implementation and administration of Risk Management and Insurance Programs for national collegiate fraternities and sororities including their “local” chapters and house corporations throughout the U.S. & Canada.
The company developed the first sorority programs in the 1970’s and the first fraternity programs in the early 1980’s. The company has successfully handled more than 6,000 claims involving more than $60,000,000 insurance recoveries for the fraternal community. We currently act as an underwriter for certain underwriters at Lloyd’s, London and the Lloyd’s Fraternity Program that has continuously served the fraternal community since 1985.
Our objectives are to continue to provide expertise, leadership and innovation to meet the Risk Management challenges faced by fraternity and sorority organizations. We accomplish this by building truly in depth and long-term relationships with our underwriters and customers.”
“In 2006, the James R. Favor Company was purchased by several national fraternal entities. Current ownership is as follows:
▪ Lambda Chi Alpha
▪ Pi Kappa Alpha
▪ Risk Management Foundation (Sigma Chi)
▪ Sigma Alpha Epsilon
▪ Sigma Alpha Mu
▪ Triangle
▪ Walter B. Palmer Foundation (Phi Delta Theta)”
FIPG as an entity has disappeared. However the NIC has new standards that follow:
The new NIC Standards copy and expand the FIPG guidelines.
By September 1, 2019, NIC member organizations will evaluate their documents to determine if they are consistent with the following guidelines. As autonomous and self-governing entities, member organizations have the latitude to codify these guidelines in a way that is consistent with their organization’s nomenclature, operations, programming, etc. Member organizations are responsible for enforcing their own policies; the NIC does not play a role in policy enforcement. In any activity or event sponsored or endorsed by the chapter/organization, including those that occur on or off organizational/chapter premises:
1. “The chapter/organization, members and guests must comply with all federal, state, provincial and local laws. No person under the legal drinking age may possess, consume, provide or be provided alcoholic beverages.
2. The chapter/organization, members and guests must follow the federal law regarding illegal drugs and controlled substances. No person may possess, use, provide, distribute, sell and/or manufacture illegal drugs or other controlled substances while on chapter/organizational premises or at any activity or event sponsored or endorsed by the chapter/organization.
3. Alcoholic beverages must either be:
a. Provided and sold on a per-drink basis by a licensed and insured third party vendor (e.g., restaurant, bar, caterer, etc.); or
b. Brought by individual members and guests through a bring your own beverage (“BYOB”) system. The presence of alcohol products above 15% alcohol by volume (“ABV”) is prohibited on any chapter/organization premises or at any event, except when served by a licensed and insured third-party vendor.
4. Common sources of alcohol, including bulk quantities, which are not being served by a licensed and insured third party vendor, are prohibited (i.e., amounts of alcohol greater than what a reasonable person should consume over the duration of an event).
5. Alcoholic beverages must not be purchased with chapter/organizational funds or funds pooled by members or guests (e.g., admission fees, cover fees, collecting funds through digital apps, etc.).
6. A chapter/organization must not co-host or co sponsor, or in any way participate in, an activity or event with another group or entity that purchases or provides alcohol.
7. A chapter/organization must not co-host or co sponsor an event with a bar, event promoter or alcohol distributor; however, a chapter/organization may rent a bar, restaurant, or other licensed and insured third-party vendor to host a chapter/organization event.
8. Attendance by non-members at any event where alcohol is present must be by invitation only, and the chapter/organization must utilize a guest list system. Attendance at events with alcohol is limited to a 3:1 maximum guest-to-member ratio and must not exceed local fire or building code capacity of the chapter/organizational premises or host venue.”
