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Michigan State University Turns to Captive Insurance Following Scandal

Definition of Sexual Misconduct 480x377
March 12, 2019

In a recent Wall Street Journal article by Melissa Korn, titled After Nassar Scandal, Michigan State Lacks Broad Sexual-Misconduct Insurance1, it was reported that Michigan State University has turned to a captive insurance solution after finding itself without direct liability insurance for sexual misconduct claims following the Larry-Nassar sex-abuse scandal. 

This came after a reduced renewal offering from United Educators for the university's general liability insurance policy. The renewal policy would have excluded broad coverage for sexual misconduct, and, apparently among other revised conditions and reductions in coverage, the new policy would have explicitly carved out any coverage for Mr. Nassar.

According to the article, last year, Michigan State reached a settlement in the amount of $500 million with more than 300 of Mr. Nassar's victims.

"United Educators was afraid that if it didn’t carve out [Mr.] Nassar from its new policy offer, it would be saddled with even more potential costs related to how the school handled his criminal misconduct," according to a source for the article.

The article stated that the university's newly-formed captive insurance company, Lysander Series, is part of North Carolina-licensed Aesir Insurance Co. Under the captive's general liability policy, Michigan state will retain the first $5 million per occurrence and the captive will cover the next $10 million above that.   

At a recent captive event, Michael Maglaras, principal at Michael Maglaras & Company, said captive insurers will be increasingly involved with lawsuits related to societal issues, such as the kind of issues that are currently saturating media headlines. In a recent thought leader video, Mr. Maglaras specifically explores the question, how will captive insurers be affected by the sexual misconduct era in which we live?

  1. Melissa Korn, “After Nassar Scandal, Michigan State Lacks Broad Sexual-Misconduct Insurance,” Wall Street Journal, March 3, 2019,

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