Background
Over the past five years, property insurance companies have faced significant challenges in maintaining profitability. A surge in catastrophic claims, changing weather patterns, and rising temperatures have contributed to this crisis. Factors such as the increasing severity of claims, dramatic rise in material costs, and historical underinsurance have compounded the problem. Additionally, there has been a startling rise in the number of billion-dollar disasters. These issues have forced insurance companies to implement rate increases, reduce coverage limits, and modify terms and conditions. The situation reached a breaking point with the devastating Hurricane Ian and subsequent winter storm of 2023. We are now in the midst of the worst property insurance market the industry has ever seen.

The Changing Landscape
The current state of the property insurance market demands a shift in the way insurance is approached. Insurers are being forced to move away from acting as quasi-warranty replacement policies and focus more on covering larger or catastrophic claims. Property owners must prepare for higher property deductibles and invest in building modifications and maintenance measures that reduce potential weather damage and the extent of damage. The industry is refining its underwriting strategies for risks such as tornadoes, wind, hurricanes, floods, wildfires, hailstorms, and freezes. Predictive modeling is getting more sophisticated and accurate, enabling insurers to better assess risk based on big data, the increasing speed of climate change, and subsequent specific locations prone to particular risks.

The crisis is not isolated to a single insurance company but is affecting the entire industry. The reinsurance market, heavily impacted by Hurricane Ian, is facing a day of reckoning. Rate increases and adjustments to coverage limits, deductibles, exclusions, and limitations have become prevalent. This situation poses challenges for insurance providers and agents, as many markets have declined coverage due to a concentration of residential frame housing values, as we already seeing in Florida and California.

Facing the Current Situation

MJ Sorority has shielded clients from market volatility in the past (see graphic) but now is being forced to address the evolving landscape. The insurance provider for the MJ Sorority Program, Travelers Insurance Company, informed us that they would be addressing conditions, rates, and deductibles upon each client’s renewal. Travelers’ actions are indicative of industry-wide changes that require careful consideration. Rest assured that unlike what we’re seeing in the homeowners’ markets[1], capacity and coverage are not at risk.

Conclusion
The property insurance market is facing unprecedented challenges due to an array of factors. Insurers and insureds alike must adapt to the evolving landscape by embracing a new business model that emphasizes coverage for larger or catastrophic claims. Increased property deductibles, building modifications, and refined underwriting practices are crucial steps. The industry’s focus on predictive modeling and big data can help allocate risk more effectively. MJ Sorority understands the difficulties posed by the crisis, and we are dedicated to enhancing risk management advice and resources, particularly regarding wind and hail perils, both at the headquarters level and among local housing volunteers.

By working together, insurers and insureds can navigate the perfect storm and ensure continued protection against unforeseen property losses. Please do not hesitate to reach out to your Client Executive with questions and concerns.

[1] For further reading about the insurance market, refer to the links embedded in the document above or review the following links fur further reading:

National fraternities and sororities have been dealing with changing circumstances on many fronts over the
last five years. Part of this changing landscape involves property management and adapting to significant
increases in property claims across the nation. As a result, property owners must prepare for higher property deductibles, due to the increase in the frequency of claims and in the increase in the severity (cost) of claims than in years past.

It is critical to an organization’s sustainability to have adequate short-term cash reserves and liquidity resources
for operational flexibility and for ensuring that organizational commitments are met timely. Beyond short-term cash reserves, fraternities and sororities should also consider building reserves to fund insurance
deductibles as claims are incurred. Such reserves (often designated by the Board of Directors) are funded so
that intermittent claims can be managed without disrupting already tight operating budgets.
In considering building an insurance reserve fund, organizations should consider the following areas:

Blue & Co.’s Not-for-Profit Services Team advises organizations on ways to improve both the balances and the utilization of reserves and liquidity resources to enhance sustainability over time. Please reach out to your local Blue & Co. advisor with any questions regarding these recommendations.

Thanks to our partners at Blue & Co. for this resource.

WHY IS HAIL SUCH A PROBLEM FOR YOUR PROPERTY’S ROOFING?
Hail can cause serious damage to your chapter house’s roof. Hail stones are made up of ice and come in a variety of shapes, sizes, and weights, which can all contribute to the destruction of your roof after a hailstorm. The weight of hail stones is also a factor that should be taken into account when considering hail resistant roofing as an option. Hail stones can cause dents, cracks, and even holes in your roof, which will leave it vulnerable to water damage and increased energy costs.

COSMETIC/AESTHETIC DAMAGE VERSUS PHYSICAL DAMAGE TO THE ACTUAL ROOF
The insurance industry has previously been willing to repair and/or replace roofs damaged by hail that are more cosmetic in nature or to match the entire roof’s shingles with the new replaced shingles due to actual hail damage. It is fair in saying that these days may be over.

There continues to be significant shifts in the weather patterns in certain parts of the US with increased wind and hail claims. The industry is seeing an increase in the storms producing conditions of hail and wind. There is an increase in the severity of the storms, thus bringing worse damage and the expanse of the areas affected are expanding more easterly than the past.

With the significant increase in hail and wind losses, all insurance companies are being forced to more closely analyze or underwrite each property risk and are looking at numerous alternatives to encourage more roof risk management. Examples we have seen across the insurance industry include:
• Significant increases in wind and hail deductibles in the wind/hail prone areas
• Limitations and exclusions to roof damage repair and replacement

IMPACT-RESISTANCE SHINGLES
Hail resistant roofing provides property owners an extra layer of protection against the destructive nature of hail stones, which can cause significant damage to traditional shingles and other roofing materials. It can withstand impacts from hail stones at speeds up to 150 mph, which is far stronger than traditional roofing materials. This extra protection minimizes the need to replace your roof after a hailstorm hits, and an additional advantage of impact-resistance roofing is its energy efficiencies, meaning you could save money on energy bills in the long run.

Unlike traditional roofing materials, impact-resistance shingles are designed to last longer, usually up to fifty years. The costs associated with hail resistant roofing materials will vary based on the resistance rating of the materials. These ratings run from Class 1 (least resistance) to Class 4 (highest resistance). Click here to see the Insurance Institute for Business and Home Safety’s list of shingle performance ratings. Generally, these roofing materials will cost more than the traditional roofing materials, but they also come with the added protection from hailstorms, last longer than traditional roofing shingles, and provide energy efficiencies.

DON’T WAIT FOR A WIND/HAIL CLAIM TO ADDRESS THE CONDITION OF YOUR ROOF
For the property owners in the following states, there has been significant increases in storms attributing to wind and hail claims:

We urge our clients in these states to take additional measures to have a sound risk management plan in place, to upgrade your roofing materials to the impact-resistance shingles when your roof needs to be upgraded, and should you have a claim, consider upgrading to the preferred materials.

ADDITIONAL ROOFING RISK MANAGEMENT
Travelers Insurance Company, who writes your property insurance, has developed an additional resource for you in your roof property management:

Chubb Insurance, the insurance company who writes your Crime Insurance Coverage, have some basic risk management rules and guidelines for the entities under your organization’s national insurance policy. These conditions are referred to as “required conditions” and list out specific requirements in the financial management to ensure that there is dual control of the financial transactions at all times. Should an embezzlement occur and the dual controls were indeed in place, then the entity would only have to absorb a lower deductible (refer to your Insurance Overview for your organization’s embezzlement limits and deductibles). However, should a claim occur and no dual controls were employed, then the per occurrence deductible would be $150,000 per occurrence.

This requirement by the insurance company hopes to serve two purposes:

Maintaining this coverage is extremely critical for our community comprised of primarily volunteer leadership. Thus, the insurance company has placed required conditions on the policy for insureds to qualify for a lower policy retention (deductible). Required Conditions means the Insured Organizations have utilized, prior to the loss sustained, a professional, third party accounting service* to provide the following controls with respect to any Chapter, Local House Corporation or Local Foundation, which will be verified at the time of loss:

Click here to see claims examples involving embezzlement  that might be useful for determining your various exposures to this type of risk.

We are confident that our clients recognize this risk to financial management and have implemented these required conditions as recommended. Should you have additional questions, please consult with your Client Executive at MJ Sorority.

*We have come to understand that this accounting service is generally being utilized, so it likely will not be a change for your operation. The policy requires the chapters/house corporations/local foundations have a professional, third -party accounting service in place at the time of a loss to qualify for the lower deductible should a loss occur. Examples of this would be an accounting firm or one of the accounting service providers in the fraternal community, such as OmegaFi and Billhighway/GreekBill.

The ruling body for fire safety codes is the National Fire Protection Association (NFPA). This entity determines the fire safety codes and is the recognized standard by which all businesses are to follow.

It is the NFPA that sets the codes for the types of sprinkler systems that must be or can be installed in a building primarily based on its occupancy. In 1896, they developed the first code for systems in residential or habitational type occupancies: NFPA 13.

NFPA 13 is designed to serve two distinct purposes:

The building must be 100% sprinklered including attic space whether accessible or not. The costs to install can be substantial for the following reasons:

For a variety of reasons such as cost and labor, NFPA came out with a modified code in the 1970s for residential housing: NFPA 13R (Residential). The main purpose of this risk management tool was purely the protection of lives, unlike NFPA 13 which also was protecting the physical property.

A criterion for the residential housing was that the structure had to be less than four stories in height. As such, the sorority chapter houses did qualify for 13R status, with the only caveat being the attics were not to be used for any purposes and were to have limited access to the attic space.

When the interest for sprinkler systems began to escalate, we were successful in getting the insurance company to provide substantial credits for a property that met the NFPA 13R code. Even though the primary benefit was life safety or the liability exposure, the insurance company agreed to apply this credit to the property premium due to our rationale, which included the following:

Over the years, we have seen an exposure emerge which has become a challenge, which is that the chapter house attics frequently aren’t sprinklered. Of the six property fires over $100,000 in claim cost, four of them started in the attic, which was unsprinklered and had no other type of fire detection system.

The biggest problem comes from the fact that the fire burns for some time in the attic and/or roof area, and it isn’t until it burns through the attic flooring for the debris to land on the next floor before the sprinkler system is engaged and the fire department is alerted. The second problem then comes when the fire department gets there and has to release far more water than normal to extinguish the fire. Subsequently, you have more of your building damaged by the fire and more water damage in trying to put it out.

The liability insurance company underwriters are still very pleased that there is reduced if not completely eliminated bodily injury exposure, but the property underwriters are growing concerned about the exposure of attic fires.

The obvious solution to this dilemma is to install sprinklers in the attic, but this would be virtually impossible for expense reasons. We have done extensive research on this matter and can reach no other conclusion.

We can however recommend another solution to the fire protection alert delay that presently exists which is the installing of a heat sensor to your existing fire alarm system in the attic space. The fire department gets alerted to a fire much faster than without sensors, and there is ultimately less property damage along with the life safety benefit. For further reading on heat sensors, check out these additional resources.

For more information on preventing phishing scams, review this resource from Chubb, the cyber security carrier for MJ Sorority clients.

Rates of mental illness on campus that were already concerning prior to the onset of the Covid-19 are skyrocketing: one in three college students are suffering from depression and even more have anxiety disorders.  

Women’s fraternities and sororities are being called upon to educate their members and volunteers in this area of growing need. From a risk management standpoint, we always recommend that students reach out to their respective campus mental health professionals; however, the mean student-to-counseling-staff ratio at colleges and universities is 1,737:1, according to a survey of counseling center directors. Clearly, the campus counseling services are unable to handle the sheer number of students in need of help. 

We have researched several affordable options that you may want to share with your members and volunteers. If you have additional suggestions, please send them to Sara Sterley, Director of Risk Management Education, so that she can continue to update this resource for our client’s use.

One of the options available for mental health well-being is the National Alliance on Mental Illness (NAMI). NAMI is the nation’s largest grassroots mental health organization dedicated to building better lives for the millions of Americans affected by mental illness. NAMI defines a mental illness as a “condition that affects a person’s thinking, feeling, behavior or mood.” NAMI also states that the first thing those who have or think they might have a mental illness need to know is that “you are not alone.” NAMI provides a variety of resources, trainings, information, programs and tools to help, including:

Mental Health America is a non-profit dedicated to improving the lives of people living with mental illness. The organization has offices and branches around the country, and a comprehensive “finding help” tool that includes self-assessment tools, links to finding someone in your community to talk to, and even tips on how to make the most of your relationship with a therapist or social worker, as well as a crisis number you can call in case of emergency (1-800-273-TALK).

Additionally, Mental Health America offers resources specifically geared toward college students, and they’ll help with other aspects of your life  that may be impacted by mental health issues. 

One of the best and most overlooked services is the 211 service that most municipal areas have. You can dial to find out about mental health, counseling, or other resources available in your community and beyond. The FCC’s “Dial 211″ info page has a wealth of information about what you can learn when you call them.

They don’t offer mental health and counseling services directly, but they can refer you to appropriate services in your area. 211 is free, but some of the services they have access to aren’t, so keep that in mind.

Talkspace is one of the original online therapy companies that enables users to connect with licensed mental health professionals based on their individual needs. There are various subscription levels available depending on one’s budget and needs.

Additionally, Talkspace offers corporate discounts for organizations who may want to offer the platform to their members.

BetterHelp is the world’s largest e-counseling platform, and it’s not just one type of counseling: you can choose to message, chat live, hop on the phone, or video chat with your therapist an unlimited number of times per week. Check out their website and over 25,000 testimonials to learn more.

Apple’s 2017 App of the Year, Calm is an app that helps you build a meditation practice that has been proven to help alleviate stress and anxiety. In addition, there are options to aid sleep. It really helps to develop a daily practice, and also enjoy a moment of calm and peacefulness when the day becomes too stressful. Many of the meditations are free, but some of the sessions are locked unless you subscribe.

What’s up is a free app that uses Cognitive Behavioral Therapy (CBT) and Acceptance Commitment Therapy (ACT) methods to help users cope with depression, anxiety, stress, and more. What’s Up offers additional resources and services to large groups like sororities to boost the mental health of their constituents.

Headspace is another free app that is rooted in the science of meditation. It has series of guided and unguided meditations, and plenty of other relevant content to listen in your own time and at your own pace.

SuperBetter is a game focused on increasing resiliency, strength, and optimism. When people played SuperBetter for 30 days, their moods improved, symptoms decreased, and self-belief in achieving goals increased, according to a study by the University of Pennsylvania.  SuperBetter is designed to help users adopt new habits, strengthen relationships, complete meaningful projects, and achieve lifelong goals. If you still don’t believe that a game can do all of that, watch this viral TED talk from the game’s designer.

This is obviously a huge issue to get our arms around. Let us know how we can come alongside you to bolster the mental health of your members, volunteers, and employees.

Click here to download your copy.

Every state has laws regarding the care and maintenance of certain mechanical pieces of equipment that potentially pose a greater risk to residents/occupants/guests in a sorority chapter house. This exposure is often referred to as boiler and pressurized vessels. We generally think of the steam operated boilers that heat a house; however, even hot water heaters in some states are also included.

Generally speaking, these laws require: (1) an operating permit to be obtained from the State Department or jurisdiction prior to operating a regulated boiler or pressure vessel; (2) all operating permit inspections to be performed by a boiler or pressure vessel inspector licensed by the Department; and (3) the Department to perform operating permit inspections on all regulated boiler or pressure vessels owned by the state.

Your insurance coverage for boilers and pressurized vessels is part of your property insurance coverage. In addition to paying for a claim should one of these items explode, the coverage also provides extensive safety engineering and inspection services which will ultimately minimize the potential for a loss.

As the law prescribes, inspections must be performed on a regular basis as determined by the state law. These could be anywhere from a quarterly to an annual inspection. As part of your insurance premium, these inspections are done by your property insurer Travelers Insurance Company, and they are free of charge. 

The jurisdiction however should they be asked to inspect by the building owner would have a fee attached to that service, thus why we encourage our clients to rely exclusively upon your insurance company to fulfill this role.

There are basically two separate transactions with this exposure:

The process is as follows:

Should you have any questions or concerns, please do not hesitate to contact us.

The milder days of spring are a perfect time to do a thorough spring cleaning and perform routine maintenance. After a long winter, it is a good idea to spend time on preventive measures to help maintain your property throughout the year. Tasks such as cleaning out your gutters, checking for dead trees and branches and cleaning and inspecting facility mechanical and plumbing systems, such as heating and air conditioning equipment, can help make spring a season of safety.

Cleaning and maintenance of your chapter house should be done inside and out. Although the tasks are different, checking to see if all the elements of your property are in good working order can help keep your members and employees safe and your maintenance expenses lower over the long run.

Here are a few things inside your facility that should be inspected to determine if they are in good condition:

The cold winter months can do damage to your property as well. Here are a few things outside your facility that should be inspected to ensure they are in good condition:

A little home maintenance in the spring can go a long way to help keep the chapter house safe and secure throughout the rest of the year.

In the MJ Sorority Program, 55% of property claims are due to water-related issues. The most common reasons for water damage are: water pipes bursting, frozen pipes thawing, and sewage and drain backups; but burst pipes, roof leaks, overflowing toilets and leaking appliances can also cause significant damage. These types of water damage can also result in business interruption, relocation costs, lost rents and can negatively impact your reputation as a business.

Though you do have broad water damage insurance protection, as the property owner, you should consider all types of tools to help you prevent water damage events and/or reduce the impact of a water claim. Installing leak detection and flow monitors also make your property eligible for a 5% credit at renewal, applied to your property insurance premium.

One of the best things that you can do to reduce and prevent water damage is to install a flow-based water leak detection device. The most comprehensive tool available is a leak protection system, which includes both a flow-based monitoring system and detectors or water sensors.

Below we explain the components of a comprehensive leak protection system. You can find specific technology and partner recommendations in this article.

How does a flow-based water shut-off device work?

Installed by a plumber directly onto your water line, a flow-based water leak detection device monitors the flow of water throughout your chapter house. If an unusual activity or flow of water is detected – probably caused by a leak somewhere in your plumbing or pipes – the device will alert you first, and then shut off your water supply to help minimize damage.

How do water sensors work?

The water sensors, placed throughout your property, can detect the presence of water, often by measuring the electrical conductivity of the water present and completing a circuit to send a signal to either an email or text.

Where should water sensors be placed?

Water sensors should be placed strategically throughout the chapter house to maximize detection. Performing regular maintenance and checking for rusty, corroded, or damaged water supply lines before you have a leak is one of the best ways to help prevent water damage.

You might want to install water sensors in areas near:

If you are having a professional plumber install your sensors, they will be able to provide advice on how many to install and where to install.

Additional Tips to Consider

Choose a flow-based leak detection device. While individual sensors that detect the pressure of water are acceptable, they cannot test for microleaks, monitor water usage, or detect burst pipes in walls or under foundations. The flow-based devices provide enhanced protection, functionality, durability, reliability, accuracy, and great value for the cost.

Several MJ Sorority clients have installed flow-based devices and the cost for a typical sorority chapter house range from $2,500-$4,000 per location. As mentioned before, when leak detection and flow monitors are installed, your property will be eligible for a 5% discount to your property insurance premium at renewal.

Select a device that automatically shuts off the water when a pipe ruptures or another water anomaly occurs. These preferred flow-based devices not only detect trouble, but also help mitigate the problem itself.

Hire a plumber to professionally install your flow-based leak detection device. Your devices should be installed on your domestic water main pipe near where it enters your chapter house. These devices will need access to a power outlet and a wi-fi router signal.

Determine your water main pipe size to order the right produce size. Ask your licensed plumber, contractor or product vendor to assist you in picking out the best device for your chapter house.

As we mentioned in above, roughly 55% of MJ Sorority property claims are water damage-related. Any preventative action will certainly reduce, not only the amount of damage, but the disruption to chapter operations. Even when the claim is handled expediently and thoroughly, it often requires your member residents to have to relocate to other lodging, which impacts their member experience and causes additional headaches for the House Corporation volunteers and/or property managers.

For a more in-depth explanation of the leak detection technologies available and specific companies that we recommend, please refer to this resource.

For further reading on preventing water damage, refer to our printable infographic or this resource for additional tips. For further information on water damage claims for the MJ Sorority book of business, refer to this infographic.