The Role We Must Own
Unfortunately, campus shootings are not a new issue and the recent (or seemingly continual) spate of incidents reinforces the need to take a holistic approach to the risk, i.e., it is not a law enforcement issue alone.
I’m not talking about the need to include a variety of campus personnel and stakeholders in the planning, response and recovery processes, this is self-evident and well-established.
Rather, in this case the term “holistic” is best applied to considering the place of mental health professionals, such as Behavior Intervention Teams (BITS) or campus counseling teams (mental first aid) in collaborating on emergency management (prep, response & recovery) and with stakeholders/administration and academics. Everybody has a stake in trying to mitigate the risk.
Most people wouldn’t argue with the point that the root cause of the vast majority of campus violence incidents is one of acute mental illness and the aforementioned feelings of desperation.
Here are two definitions of “holistic”:
Philosophy – characterized by comprehension of the parts of something as intimately interconnected and explicable only by reference to the whole.
Medicine – characterized by the treatment of the whole person, taking into account mental and social factors, rather than just the physical symptoms of a disease.
Recently when speaking with mental health professionals about emergency preparation and response, I had an epiphany … this being that the mental health component of preparation, response and recovery had not been a focus or even present in the emergency planning conversation.
As such, I made a commitment that one of my big pushes going forward was to make sure I would be an advocate for having campus mental health professionals at the table when discussing campus risk mitigation and crisis response.
In the words of Patrick Prince of Prince & Phelps Consultants: “No one wakes up one morning and decides, ‘I think I’ll go shoot up a campus today’.”
Rather, it is generally a lengthy mental process as one devolves from feeling that they have a gripe to feeling totally disenfranchised, disrespected, desperate, lonely and angry.
There are points along the way wherein there is a chance for intervention to address the risk and perhaps even assist the person of interest.
Most people wouldn’t argue with the point that the root cause of the vast majority of campus violence incidents is one of acute mental illness and the aforementioned feelings of desperation. We must remember that the perpetrator was once someone’s baby, friend, schoolmate, etc. and likely was not born with homicidal ideations.
Herein lies the opportunity for mental health professionals to mitigate the risk by assisting in the identification of people at risk, collaborating on intervention techniques and perhaps even treatment.
Further, it is incumbent upon an organization to stress the values of empathy, respect, dignity and looking through a holistic and not personally prejudiced paradigm.
We all have a chance to mitigate the risk by being decent human beings and not being afraid to reach out to appropriate persons to address a concern when observing disturbing behavior. “It is not my problem,” or “ I do not want to get involved,” are not responsible alternatives.
Ask yourself this.
“Are you a potential solution or a potential victim?”
Liberty! Fraternity! Liability!
Recent incidents alleging alcohol abuse, sexual assault and other bad behaviors at America’s college fraternities have drawn national attention. Much of the discussion has focused on causes and prevention, but with litigation inevitable in some of these incidents, questions of liability are sure to arise.
Individuals directly involved in such incidents face potential liability, but claims can also extend to the local and national fraternity organizations, to the universities and colleges with which they are affiliated, and even to the local chapters’ officers and their families.
“It all depends on how the claim or the complaint that is filed in court is framed. What are the allegations in that litigation? Who are the named defendants, and what are the circumstances of how it happened and can it be corroborated?” said Michael Liebowitz, senior director of enterprise risk management and insurance at New York University.
The local and national fraternities may face liability for incidents that occur during fraternity events, especially on fraternity premises. Most local chapters have liability coverage purchased by their national organizations through a handful of companies that specialize in insuring fraternities and sororities. The largest of these, James R. Favor & Co., was actually acquired by a group of national fraternity organizations in 2006.
But just because a fraternity has general liability insurance, doesn’t mean a particular incident will be covered.
But just because a fraternity has general liability insurance, doesn’t mean a particular incident will be covered.
“Insurance policies typically exclude any criminal violations. So if it’s considered a crime, the policy is not going to cover it,” said Leta Finch, leader of Aon Risk Solutions’ national higher education practice.
In March 2014, “The Atlantic” reported that most fraternities have stringent, but largely unenforced, alcohol policies in place. The vast majority of fraternity-related injuries, assaults and other incidents involved violations of alcohol policies, which effectively provide liability protection for the fraternities while placing the individual members outside the coverage.
Lisa Zimmaro, assistant vice president for risk management and treasury at Temple University in Philadelphia, said that “fraternity insurance carriers have huge exclusions for alcohol-related events and sexual assault. … If the insurance carrier for the fraternity excludes certain acts, then the victim would have to look elsewhere for compensation for damages.”
One place they might seek compensation is from the university or college with which the fraternity is affiliated — and the nature of that affiliation can help determine what liability the institution might face.
Institutions that provide fraternities with space on campus, security, financial support or other resources could be perceived as having greater liability.
Closer relationships mean greater liability. Institutions that provide fraternities with space on campus, security, financial support or other resources could be perceived as having greater liability. Those with more distant and less structured affiliations would face fewer liability issues.
Institutions should also be aware of exclusions to their coverage.
“If it is excluded on the policy and there is a finding in a civil action, the university would end up paying out of pocket. Just because there is an insurance exclusion doesn’t get them off the hook,” said Zimmaro, who added that institutions should also be aware of sub-limits.
“There maybe sub-limits, even if there’s not an outright exclusion, maybe coverage up to $5 million instead of $25 million. Know the limits of what your policy is going to pay,” she said.
The best way to avoid liability may be to prevent fraternity incidents from occurring, but ironically, codes of conduct and prohibitions on behaviors can increase liability if they lack adequate follow through.
“The minute colleges and universities start to dictate policy on fraternities and sororities, they are vicariously picking up liability, because then they are going to be forced to police it.” — Michael Liebowitz, senior director of enterprise risk management and insurance, New York University
“The minute colleges and universities start to dictate policy on fraternities and sororities, they are vicariously picking up liability, because then they are going to be forced to police it.
“[If] something bad happens because someone broke the rules, then the question is, ‘Why didn’t you have surveillance in place to monitor what was going on?’ So it is very much a double-edged sword,” said Leibowitz.
Finch pointed out that enforcing codes of conduct that lack clear consequences can also leave institutions exposed to liability from violators who feel they have been disciplined unfairly, treated inconsistently or been denied due diligence rights.
Parents of fraternity members can also face liability — and not just the parents of those directly involved in incidents.
Leibowitz said that while primary liability lies with the fraternity member who committed the acts in question, “the rest of it lies with the officers of the chapter, from the president straight on down, because they’re the ones that set the tone, they’re the ones that are supposed to control what goes on. … If you want to be an officer, it comes with responsibility, and responsibility comes with liability.”
Zimmaro agreed. “Families are sued all the time for the acts of their students who are involved in incidents involving any kind of organization where someone gets hurt. An attorney is going to look for a compensation source, and if it’s mom and dad, then it’s mom and dad.”
Managing Construction’s True Risk Exposure
When it comes to the construction industry, the path to success is never easy.
After a long, deep recession of historic proportions, the sector is finally on the mend. But as opportunities to win new projects grow, experience shows that more contractors go out of business during a recovery than during a recession.
Skilled labor shortages, legal rulings in various states that push construction defects onto general liability policies, and New York state’s labor laws that assign full liability to project owners and contractors for falls from elevations that injure workers are just some of the established issues that are making it ever harder for firms to succeed.
And now, there are new emerging risks, such as the potential for more expensive capital, should the Federal Reserve increase its rates. This would tighten already stressed margins, perhaps making it harder for contractors and project owners to invest in safety and quality assurance, and raising the cost of treating injured workers.
Liberty Mutual’s Doug Cauti reviews the top three risks facing contractors and project owners.
“Our customers are very clear about the challenges they are facing in the market,” said Doug Cauti, the Boston-based chief underwriting officer for Liberty Mutual’s construction practice.
“Now more than ever, construction risk buyers – and the brokers who serve them – are leveraging our team’s deep expertise to find solutions for complicated risks. This goes way beyond what many consider the traditional role of an insurance carrier.”
Other leading risks facing contractors and project owners.
Given the current risk environment, firms that simply seek out the cheapest coverage could leave themselves exposed to these emerging risks. And that could result in them becoming just another failed statistic.
So what is the best way to approach your risk management program?
Understanding the Emerging Picture
Construction firms have been dealing with multiple challenges over the last several years. Now, several new emerging risks could further complicate the business.
After an extended period of historically low interest rates, the Federal Reserve is indicating that rates could rise in late 2015 or sometime in 2016. That would surely impact construction firms’ cost of capital.
“At the end of the day, an increased cost of capital is going to impact many construction firm’s margins, which are already thin,” Cauti said.
“The trickle-down effect is that less money may be available for other operational activities, including safety and quality programs. Firms may need to underbid and/or place low bids just to get jobs and keep the cash flow going,” Cauti said.
“Now more than ever, construction risk buyers – and the brokers who serve them – are leveraging our team’s deep expertise to find solutions for complicated risks.”
— Doug Cauti, Chief Underwriting Officer, Liberty Mutual National Insurance Specialty Construction
“Experience shows us that shortcuts in safety and quality often lead to more construction defect claims, general liability claims and workers’ compensation claims,” Cauti said.
Currently, the frequency of worker injuries is down on a national basis but the severity of injuries is on the rise. If those frequencies start creeping up due to less robust safety programs, the costs could grow fast.
And if this possible trend is not cause enough for concern, the growing costs associated with medical care should have the attention of all risk managers.
“Five years ago medical costs represented 56 percent of a claim,” said Jack Probolus, a Boston-based manager of construction risk financing programs for Liberty Mutual.
“By 2020, that medical cost will likely grow to 76 percent of an injured worker’s claim, according to industry experts,” Probolus said.
Rising interest rates and rising medical costs could form a perfect storm.
Focusing on the Total Cost of Risk
For risk managers, the approach they utilize to mitigate the myriad of existing and emerging risks is more important than ever. The ideal insurance partner will be one that can integrate claims management, quality assurance and loss control solutions to better manage the total cost of construction risk, and do it for the long term.
Liberty Mutual’s Doug Cauti reviews the partnership between buyers, brokers and insureds that helps better manage the total cost of insurance.
In the case of rising medical costs, that means using claims management tools and workflows that help eliminate the runaway expense of things such as duplicate billings, inappropriate prescriptions for powerful painkillers, and over-utilization of costly medical procedures.
“We’re committed to making sure that the client isn’t burdened in unnecessary costs, while working to ensure that injured employees return to productive lives in the best possible health,” Probolus said.
The right partner will also have the construction industry expertise and the willingness to work with a project owner or contractor from the very beginning of a project. That enables them to analyze risk on the front end and devise the best risk management program for the project or contractor, thereby protecting the policyholder’s vulnerable margins.
“We want to be there from the very beginning,” Liberty Mutual’s Cauti said.
“This isn’t merely a transaction with us,” he added. “It’s a partnership that extends for years, from binding coverage, through the life of the project and deeper as claims come in and are resolved over time,” he said.
In other words, it’s a relationship focused on value.
Today’s construction insurance market – with an abundance of capacity – can lead to new carriers entering the market and/or insurers seeking to gain market share by underpricing policies.
“We see it all the time,” Liberty Mutual’s Cauti said.
Where does this leave insureds? Frustrated at pricing instability, or by the need to find a new carrier. And wiser, having learned the wisdom of focusing on value, that is the ability to better control the total cost of risk.
“Premium is always important,” notes Liberty Mutual’s Cauti. “But smart buyers also understand the importance of value, the ability of an insurer to partner with a buyer and their broker to develop a custom blend of coverages and services that better protect a project’s or contractor’s bottom line and reputation. This is the approach our dedicated construction practice takes.
Why Liberty Mutual?
For more information on how Liberty Mutual Insurance can help assess your construction risk exposure, contact your broker or Doug Cauti at [email protected].
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.