Insurance Group Looks At Hampshire College's Future As Another Trustee Resigns

Apr 4, 2019

As Hampshire College continues to consider its future amid a tough financial outlook, it may have another issue to deal with: its insurance coverage.

Hampshire, Smith, Mount Holyoke and Amherst Colleges all cover themselves through what's known as a captive insurance company — which they collectively own.

With Hampshire's announcement this year that it's seeking a "strategic partner," the group is now considering how that would impact the insurance partnership.

"We're looking at all kinds of options," said Stacie Kroll, the director of compliance and risk management with the Five College Consortium. "One of those options is that Hampshire is not a member of the captive, but that's one option. So, it's an option, but there's no imminent threat of one over another."

A Hampshire spokesman said they'll be working with the other colleges to evaluate any impact Hampshire's plans might have on the insurance group. He declined comment on what the impact would be on Hampshire if it were asked to leave.

Should that happen, one insurance expert said Hampshire shouldn't have much trouble finding coverage on its own, but there likely will be differences compared to the school's current insurance.

"Depending on how this captive is set up, it might be an option that's much more expensive, and less flexible," said Peter Kochenburger, an associate professor at the University of Connecticut Law School who specializes in insurance law and litigation. "Certainly, insurance companies are underwriting colleges and universities, and there's both agents and brokers and insurance companies that that's one of their specialties."

The insurance issue is central to the resignation of another Hampshire College trustee, the second this week.

Mingda Zhao wrote in his letter to former board chair Gaye Hill that he reached out to the presidents of Amherst, Hampshire and Mount Holyoke after he said Hampshire president Miriam Nelson told the trustees the other colleges were considering terminating Hampshire's membership in the insurance group.

Zhao said that would impose "an impossible financial burden upon Hampshire."

According to a letter to the Hampshire community from board vice chair Kim Saal and trustee Fraser Beede, Zhao's actions were a "a significant breach of confidentiality. This was done without authorization of then Board Chair Gaye Hill. Trust is essential to the integrity and functioning of any Board. The Board expects the highest level of conduct and confidentiality from trustees."

Zhao, in his letter, said he was "discharging my fiducuary duty" by reaching out to the other college presidents. 

Hill resigned earlier this week, citing "slanderous attacks" against her as the board has made decisions about Hampshire's future.