Top US university loses insurer liability for sexual misconduct following Nassar scandal

Top US university loses insurer liability for sexual misconduct following Nassar scandal | Insurance Business

Top US university loses insurer liability for sexual misconduct following Nassar scandal

In May 2018, Michigan State University (MSU) agreed to pay a US$500 million settlement to the 332 women and girls who accused sports doctor Larry Nasser of abusing them. Nine months later and MSU, where Nassar was employed as an osteopathic physician, is still feeling the effects of the scandal after failing to reach a general liability agreement with its insurer of 18 years.

According to a Wall Street Journal (WSJ) report, MSU’s new insurance policy “broadly excludes insurer liability for sexual misconduct,” meaning the university will have to cover negligence or liability claims related to sexual misconduct out of its own coffers.

Disgraced sports doctor Larry Nasser pleaded guilty in January 2018 to seven counts of criminal sexual misconduct and was sentenced to 40- to 175 years in prison. A Michigan state prosecutor accused MSU president Lou Anna Simon of having knowledge of accusations made against Nassar in 2014 but failing to act. Simon denied the charges but later resigned, just hours after Nassar’s sentencing hearing.

The WSJ has reported that MSU has set up its own captive insurance company after failing to reach a liability agreement with its insurer. The captive company is allegedly under Aesir Insurance Co. and is called Lysander Insurance.

A spokesperson for the school, Heather Young, told the WSJ that MSU “continues to assess its insurance coverage and self-insurance programs to best protect the university’s interests going forward.”