The Nationals control the local chapters through mandatory insurance coverage only available to the National which comes from a National owned insurance trust or wholly owned broker. The entire structure is controlled by the Nationals. All the insurance premiums are paid by the undergraduate men to fraternity owned entities at rates that provide substantial excess income with which to pay extensive staffs. Separate corporations are present to own the real estate. This is to avoid liability and take the fraudulent position that the corporations merely are landlords, not alumni controlled and owned supervisory entities subject to the all fraternity entity risk management code.

The Nationals are the only ones with actual insurance. This is structured so that the undergrads and chapters are only covered by minimal coverage on an eroding policy or coverage is withdrawn the moment notice of any risk management violation is received. The National however, is covered by substantial funded self-insured retention, two million general liability, and four million or more in excess liability coverage. Again, this is fully paid for by the undergraduates who receive next to no benefit.

Then there are the two fraternity trade associations tying this all together, the Fraternity Executives Association (FEA trade association for the management) and the North American Interfraternity Conference (NIC trade association for most of the member fraternities). A third organization, Association of Fraternity Advisors (AFA) consists of the “Greek Life” staff at basically every college or university in the country which mandates insurance and the universal risk management code be in place at every campus.

Background on the "Risk Management" Enforcement and Sanctions in the "Fraternity Industry"

I.          Situation Priot To 1979:

Fraternities were going out of business

The “National” organization of the fraternity was pretty much non-existent. The real estate of the typical local chapter was owned by local alumni. The average chapter was over 75 years old with significant alumni to support it. Insurance was obtainable for a nominal amount per year. The national organization consisted of an executive secretary, usually a very senior alumnus, and perhaps a couple of chapter consultants who would travel the Greek world, visiting chapters while cursorily checking in with the undergraduates and alumni.

 The Nationals' only source of revenue was the undergraduate dues, voluntary alumni dues and sale of pins and other membership material. The fraternities were competing on campus to lower costs and attract more members than their competition. The fraternities were basically indistinguishable from each other, the only difference was cost.

II.          Animal House

The National chapter, technically the home office, was caught totally by surprise. Animal House, plus nation-wide 18-year-old drinking, brought fraternities to a new low. At this point insurance was something that the national bought for a couple of grand and the more affluent chapters with alumni associations would also obtain for a little less.

Lawsuits against the National were unheard of. Lawsuits if they happened would go against the chapter or individuals therein. The situation changed, and quickly. When I stepped down as Executive Director of Delta Kappa Epsilon in 2009, our insurance premium was over $175,000 with an additional $25,000 self-insured retention and had reached over $300,000 before we became a member of FRMT (described later).

In 1987, at a Fraternity Executives Association (FEA) Annual Meeting that I attended, we as a body learned that Maurice Littlefield, the Exec of Sigma Nu, was being named in a hazing suit at a local chapter that included, the Chapter, the National, and Mr. Littlefield and his wife personally. The meeting was chaired by Durward Owen, the Executive Director of Pi Kappa Phi who, together with Ned Kirklin, an insurance broker, was working on a solution to risk management problems.

III.              FIPG (Fraternity Insurance Purchasing Group) Never Found Insurance but Established the Entire Risk Management Standards for the Greek World

The New World of Liability Crisis was upon us. In December of 1987, FIPG then “Fraternity Insurance Purchasing Group, Inc.” was established. For the first time a group of fraternities would band together with a common risk management program and seek national insurance as a package from an insurance broker.

As put in the FIPG Manual:

“With parties and behavior out of control, it was only a matter of time before people began seeking compensation for injuries or deaths, not to mention the response from municipal authorities, college and university administrators, neighbors and parents. Tort law in the United States was continuing to shift to the plaintiff’s side of the courtroom. Comparative negligence—the concept that a plaintiff could be negligent and still pursue recourse against a defendant—was becoming the standard.

One of the editors of this manual recalls a meeting in the spring of 1989 with representatives of the large liability insurance company that insured his fraternity. He had been appointed CEO late in 1988 and had little grasp of the nuances of the insurance industry. The meeting had been called by representatives of the company after three lawsuits were filed in rapid succession that involved three different chapters.

December 3, 1987 is the date that changed the way many Greek letter organizations conducted social events and indeed, other aspects of risk management. On December 3, 1987, the Fraternity Insurance Purchasing Group adopted Articles of Incorporation. Terms like risk management, host liquor, umbrella policies, duty, standard of care and legal liability became a part of the contemporary Greek vocabulary.

The Mission Statement of FIPG states: "FIPG, Inc. is a consortium of men's and women's fraternities and sororities which provides leadership in establishing and developing policies and practices for member organizations, educates and supports undergraduates, alumni/ae and Greek systems in risk management, and works to improve and enhance the image and reputation of all Greek-letter organizations through risk management.^[1]” (Emphasis added)

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.

IV.        FIPG Becomes a Campus Standard

However, 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.

V.          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. Another group of 8 Nationals purchased James R. Favor Insurance, which has a direct connection to Lloyds of London.

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. Interestingly, despite 100% of the revenue coming from the undergraduates, the overwhelming amount of insurance was 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.

VI.        FIPG Risk Management Policy -- FIPG 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 prohibited.

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).^[2]

*         *         *         *          *       *           *       *             *         

“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. For more information, refer to www.fipg.org. [site no longer exists] Currently 50 national fraternities and sororities belong to FIPG.”^[3]

The FIPG Manual is a 50 page manual which until recently was annually transmitted to all members for retransmission to all fraternal entities, available on line.^[4] It has recently disappeared from the web for reasons dealt with later on, however it is still relevant as describing the universal minimally acceptable risk management code in the Greek world.

VII. FRMT Ltd. and James R. Favor, Inc.

The driving engine behind FRMT has been Ned Kirklin. In September of 1996 Ned with 12 National Fraternities formed FRMT, Ltd. a Bermuda based reinsurance company. It was brought onshore to Vermont in 2007 at a meeting that I attended, where it assumed its current organizational structure.

James R. Favor, Inc. is an insurance brokerage owned by a group of Nationals with direct access to Lloyd's of London. Both operate similarly. My experience was with FRMT as Executive Director of Delta Kappa Epsilon.

According to its website, FRMT, Ltd. performs the following:

In addition to providing comprehensive insurance coverage the FRMT organization works to provide risk management resources and education to improve the undergraduate experience of their members. The risk management efforts include:

A)  Semi-annual publishing and distribution of FRMT News.

B)  Sponsorship of the FRMT Risk Management College each June as a risk management educational program for the professional staff and volunteers of FRMT member fraternities and invited guests.

C)  Development and support of this web-based resource (FRMTLTD.org).

FRMT Membership

There are currently 33 members in FRMT. Only members enforcing FIPG were permitted to join. 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.

Holmes Murphy provides a full range of investigators, counsel, newsletters, a Member Accident Protection Plan that provides up to $100,000 coverage for accidental injury, an annual “risk management college,” several programs, and lots of Twitter feeds on Risk Management. It also has Webinars covering all risk management topics that are continually marketed through Tweets and newsletters and are actively posted on the FRMT, Ltd. website.

VIII.       James R. Favor & Company, LLC

a.   Organizational Structure^[5]

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

·        Sigma Chi

·        Sigma Alpha Epsilon

·        Sigma Alpha Mu

·        Tau Kappa Epsilon

·        Triangle

·        Phi Delta Theta

b.        The Lloyd's Relationship

“In the midst of the “Liability Crisis” in the 1980’s James R. Favor Company initiated at Lloyd’s what has come to be known as The Lloyd’s Fraternity Program providing broad customized Property and Liability insurance protection for the fraternal community. The company is privileged to have earned the respect and full confidence of Lloyd’s and has been appointed by Lloyd’s as the exclusive Coverholder for The Lloyd’s Fraternity Program. As the Lloyd’s Coverholder the company is authorized to underwrite and accept fraternity / sorority risks on behalf of Lloyd’s. James R. Favor & Company underwrites, develops and customizes for each individual fraternity / sorority customer all of the individual terms, conditions, costs and other details of the insurance programs for its customers. Lloyd’s is fully bound by the company’s decisions. In dealing with James R. Favor & Company you have immediate access to the final decision maker for your insurance program so that important matters can be discussed directly and decisions can be mutually developed and promptly implemented.”^[6]

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 primarily 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 was to protect the Nationals from behavior of the chapters and individuals associated with the chapters.

However, one Hundred percent of the Insurance Premium and additional funding came from the undergraduate members. Yet the Nationals were the only ones adequately insured while the undergraduate members would find themselves not insured or insured through a small eroding policy.

IX.              The Disappearance of FIPG since 2016

There has been a dramatic change since the summer of 2016. The following is a memorandum sent out after the summer FEA (Fraternity Executives Association) meeting:^[7]

“Fraternity Executives Association, Inc.

Developing fraternal leaders since 1930

In 2016 the Fraternal Information and Programming Group (FIPG); will dissolve as an association and transformation into a committee of the Fraternity Executives Association (FEA). As a stakeholder in FIPG we wanted to ensure you had all the relevant information about this transition.

First, a brief historical review.

FIPG was formed in 1987 by 11 men’s national fraternities as a means of purchasing liability insurance. Although FIPG never served that specific purpose, the process of forming the group required the development and adoption of a policy regarding risk management—today that policy is known as the FIPG policy.

Membership expanded over the years to fifty women’s and men’s national fraternities and sororities, along with several umbrella organizations such as the North-American Interfraternity Conference (NIC) and more recently the National APIA Panhellenic Association (NAPA). FIPG maintained its status during that time as a membership-driven non-profit association with a board of directors. Member organizations paid yearly dues and agreed to follow the policy as a minimum standard.

The FIPG policy became the standard for many campuses as well as its member organizations and others. The policy was edited and expanded on a number of occasions to address and accommodate changes in chapter and institutional culture as well as best practices.

In 2014 the FIPG board of directors voted to begin the process of ending FIPG as a stand-alone association with the understanding that it would become a committee of FEA. That change was formally approved by a membership vote in March of 2016. An attorney was retained to guide FIPG through the process of winding up its affairs. We are in the final stage of closing out the FIPG accounts and transferring the assets to the FEA. We expect that to be completed within two months.

Here are some frequently asked questions:

1)      What will happen to membership status within FIPG for national organizations?

FIPG will become a resource for all including its former members. Each national organization may choose to follow some, most or all of the precepts of the FIPG Guidelines. There will no longer be membership nor will there be dues or fees associated with FIPG.

2)      As a campus professional how willI be able to determine the risk management policies of women’s and men’s chapter on our campus?

Much as you did before. Policies have always been a product of the philosophy and practices of each national organization. While membership in FIPG meant that a national organization adopted the policy as a minimum it did not limit or preclude the national organization from adding to or modifying some parts of the baseline policy as long as the policy was consistent with FIPG policy. I recommend you contact each national organization and ask for their current policy.

3)      What will become of the policy? We often refer to it on our campus.

The policy will remain but under the new title of “Guidelines”. The good news is that this will allow the FEA committee to make changes to the guidelines, add language, expand explanations and include specific examples and definitions.

4)      Can a national organization that was a member of FIPG continue to use the guidelines as a policy or not at its discretion?

Yes. One of the least-understood aspects of membership in FIPG is that member organizations agreed that they would follow the policy as a minimum standard. They could add to the policy or create a more specific or higher standard. But, there was no enforcement or compliance aspect with membership. Member organizations stated that they would follow the policy. Now, that requirement is no longer in place and “policy” has been replaced with “guidelines”. That means, of course, that any organization may utilize the Guidelines as an outline or word-for-word if it chooses to do so. It is our sense that most of the national organizations will retain the FIPG language.

5)      Where can we access the FIPG Guidelines?

Via the FEA website (http://fea-inc.org/fipg). Membership is not required to access the Guidelines. [Link no longer exists]

6)      Who will oversee the Guidelines? We liked the feature of asking for help with policy interpretation.

An FEA committee comprised of knowledgeable executives will oversee the Guidelines including any additions, language and so forth. The benefit of using “guidelines” is that language can be added without concern for adherence to a “policy”. The Guidelines interpretation feature will continue and we hope that everyone will take advantage of that service.

7)      Will there be any costs involved with accessing or using the Guidelines or the interpretation aspect?

No. This will be offered as a free service provided by the FEA.

8)      When will the dissolution be completed?

Dissolution is not a simple process. But we’re hoping for completion within the next 60 days.”

The latest is contained in the following press release from the FEA dated April 17, 2019:

We recognize that colleges and universities would prefer to reference standard policies that are also being adopted by the majority of fraternities and sororities. We recommend that your campus refers to the policies that have been developed by the NIC and NPC as a majority of their member organizations are adopting these policies.

Moving forward references such as “refer to the FIPG policy” or “our organization/campus follows FIPG policy” should be adjusted to remove FIPG and merely include the risk management guidelines you intended that may or may not align with NIC or NPC standards.

History of FIPG

FIPG was formed in 1987 by 11 men’s national fraternities as a means of purchasing liability insurance. Although FIPG never served that specific purpose, the process of creating the group required the development and adoption of a policy regarding risk management. For many years, that policy was known as the “FIPG policy.”

Membership expanded over the years to fifty women’s and men’s national fraternities and sororities along with several umbrella organizations such as the North-American Interfraternity Conference (NIC) and more recently the National APIA Panhellenic Association (NAPA). FIPG maintained its status during that time as a membership-driven non-profit association with a board of directors. Member organizations paid yearly dues and agreed to follow the policy as a minimum standard.

The FIPG policy became the standard for many campuses as well as its member organizations and others. The policy was edited and expanded on a number of occasions to address and accommodate changes in the chapter and institutional culture as well as best practices.

In 2014 the FIPG board of directors voted to begin the process of ending FIPG as a stand-alone association with the understanding that it would become a temporary sub-committee of FEA during the transition. A membership vote formally approved that change in March of 2016. An attorney was retained to guide FIPG through the process of winding up its affairs. Member organizations will note that an invoice for membership dues for 2015-2016 was not sent out and no annual meeting was held that summer during the FEA meeting.

As of 2016, the FIPG organization and the policies referred to by national headquarters and campuses as FIPG policies were disbanded and no longer used as a reference.

A communication was sent in August of 2016 to all members of FEA and our campus partners that outlined the discontinuance of FIPG as a “policy.” However, organizations and campuses were welcome to use similar language when writing or updating their own risk management policies. It was further suggested at the time that references such as “refer to the FIPG policy” or “our organization/campus follows FIPG policy” be discontinued.

While FIPG served a valuable purpose for significant period of time, both its organizational status and guidance no longer exist."

X.         NIC — The North American Interfraternity Conference

FIPG standards, manual and website disappeared from the web sometime after January 2019. In November 2018, the North American Interfraternity Conference (NIC) at its annual meeting unanimously adopted new standards regarding alcohol.

In order to get a better understanding, I contacted both the FEA and the NIC. I received the following response from Nicki Meneley, the Executive Director:

“The FIPG "policy" transitioned to guidelines/recommendations in 2016 when FIPG dissolved as a stand-alone entity. FEA is a professional development organization for headquarters staff members so we use FIPG as a resource when/if organizations need it as a framework to write or update their own policies. Most of the fraternities fall under the NIC health and safety standards and I know NPC [sorority trade association] is discussing what path they take.”^[8]

An email exchange with Todd Shelton, NIC Chief Communication Officer directed me to Fraternities unanimously adopt Health and Safety Guidelines which reads:^[9]

FOR IMMEDIATE RELEASE

Jan. 10, 2019

Heather Kirk, Chief Communication Officer

317.872.1112; Heather.kirk@nicfraternity.org

INDIANAPOLIS—In a historic decision, the 66 fraternities of the North American Interfraternity Conference adopted guidelines to standardize and strengthen health and safety measures across fraternities.

In unanimous agreement, leaders of the NIC fraternities voted at a November 29, 2018, meeting to adopt 10 guidelines (below) designed to reduce the presence and negative impact of alcohol and drugs in the fraternity experience. By September 1, 2019, each of the 66 fraternities will codify these measures in its own policies and implement them in its chapters.

“Our assessment shows these are best-practice strategies that make a big difference in safety for members and guests,” said Mark Timmes, Pi Kappa Phi CEO, who led the committee charged to provide recommendations on health and safety guidelines to the NIC. “When fraternities can move as one to implement consistent measures across a campus community—and across the more than 6,100 chapters in North America—we create shared expectations and a level field for all members.”

These guidelines build upon the fraternities’ strong commitment to enhance the health and safety in campus communities. In the last year, NIC fraternities voted to ban hard alcohol in fraternity houses and events by September 1, 2019; partnered with parents who have lost their sons to hazing to strengthen hazing laws across the country and educate high school and college students on hazing and bullying; implemented conference-wide adoption of medical Good Samaritan policies; and are developing SocialSafe, an online event management platform and app.

“This is another important step to improve the health and safety for our 385,000 members and their guests,” said Judson Horras, NIC President & CEO. “This will lead to a more unified prevention and accountability system, resulting in safer communities and refocusing fraternities on brotherhood, personal growth, support and service.”

While elements of these guidelines have been in place across many organizations, through this historic agreement, all NIC fraternities will—for the first time—implement uniform health and safety measures. These NIC Alcohol & Drug Guidelines will also appear in the forthcoming Interfraternity Council Standard Operating Procedures the NIC is implementing, which provide structure, support and accountability for campus IFCs.

As with all NIC Standards and guidelines, these are minimum expectations; when member fraternities and campuses have more restrictive policies, students and chapters will still be expected to follow those.^[10]

The new NIC Standards merely copy and expand the FIPG guidelines. The adoption requirements for NIC members are:

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:" (The requirements are then listed)

A large portion of the fees collected annually by each organization is used for purchase of insurance for the National Fraternity. All revenue for this coverage comes from the undergraduates, and it is a means of controlling the undergraduate chapters, as they will not be permitted to by any institution of higher learning to exist on campus without insurance coverage. As addressed earlier in this report, this insurance coverage is unavailable to the local chapters except from the National. As a result, the chapter is obligated to follow the policies of the National, including abidance of the Risk Management Codes, formally the FIPG code. Moreover, this coverage, provided by the National through its partially owned Insurer, permits the National which has contributed none of the premium to determine the coverage for the various entities and intentionally underinsures the undergraduate members who paid 100% of the coverage.

[1] FIPG Manual 2013 Edition pp2-3
[2] FIPG Risk Management Manual last edition dated 2013
[3] FIPG Risk Management Manual last edition dated 2013
[4] FIPG Risk Management Manual last edition dated 2013
[5] James R. Favor & Company LLC website
[6] Jrfco.com
[7] Fraternity Executives Association Memo re: FIPG moved to FEA<
[8] Email nicki@fea-inc.org to Davideaslick@gmail.com<, dated March 27, 2019 5:10 PM.
[9] Email todd.shelton@nicfraternity.org to davideaslick@gmail.com, dated March 28,2019 10:33 AM.
[10] https://nicfraternity.org/fraternities-unanimously-adopt-health-and-safety-guidelines/
[11] https://nicfraternity.org/nic-alcohol-drug-guidelines/