Michigan State University (MSU) has launched its own captive insurance company to cover general and auto liability, following the Larry Nassar sex abuse scandal.
Created in July 2018 and managed by USA Risk, the Lysander Series is a series of North Carolina-domiciled captive Aesir Series that provides coverage for general liability and automobile liability.
The captive has a $10 million limit for each occurrence and a $20 million general aggregate limit.
MSU has a $5 million self-insured retention and the Lysander coverage is entirely reinsured.
Excess coverage of $45 million is in place above the Lysander policy limits.
In April 2018, United Educators, MSU’s primary insurer for general liability between 2000 and 2018, issued written notice of policy cancellation to MSU.
The decision came in the fallout of the Nassar sex abuse scandal, one of the largest sexual abuse scandals in sports history in which more than 265 women accused Nassar, an osteopathic physician for both MSU and USA Gymnastics, of sexually abusing them.
In January 2018, he was sentenced to 40 to 175 years in prison.
UE later offered to renew the policy but with new conditions that would have narrowed the scope of the coverage and no longer provide the university with the coverage it had previously provided.
The coverage provided by MSU’s captive excludes coverage for claims arising from abuse or molestation of any person while in the care, custody or control of MSU.
Heather Young, a spokesperson from MSU, explained: “MSU continues to assess its insurance coverage and self-insurance programs to best protect the university’s interests going forward.”
She added: “Using a captive insurance company is not uncommon for large universities. It is a cost-effective way to self-insure and gain access to reinsurance.”
According to Young, many other US universities, including Brown, Columbia, Dartmouth, Princeton, Temple, and Butler, use captives in their risk management strategies.
