Earlier this year, I attended the Association of Fraternal Benefit Counsel Annual Meeting in beautiful Coeur d'Alene, Idaho. In addition to checking another state off my bucket list, I valued the opportunity to learn more about the unique structure of fraternal organizations and the complexities that structure can create. Fraternal benefit societies are nonprofit organizations that combine a social mission with life insurance and other member benefits. All fraternals operate through a lodge system, with local chapters functioning either as legally distinct entities or as unincorporated subsidiaries of the national organization.

When Structure Drives Liability

The structure and governance of a fraternal organization can have a significant impact on liability exposure. National organizations are often named in litigation because they have deeper pockets, even when liability may rest elsewhere. However, where local chapters are legally separate entities, the national organization may ultimately have little or no responsibility for the underlying claim. On the other hand, fraternals that provide centralized services or operate under a more integrated model may face greater challenges in distancing themselves from litigation.

Long-Tail Risks Facing Fraternals

I had the pleasure of speaking on a panel alongside Brian Gedicks of the Knights of Columbus, Myles Alderman of Alderman & Alderman, LLC, and Tracy Saxe and Eve-Lynn Gisonni of SDV Fenchurch. During our presentation, Long-Tail Liabilities: A Whale of an Odyssey, we explored several categories of long-tail claims that fraternals may encounter, including abuse-related claims and environmental liabilities. The community-focused activities that make fraternals such valuable institutions can also create potential sources of risk.

Similarly, organizations with current or former real estate holdings may find themselves facing environmental cleanup obligations for chemicals like PFAS, even if they played little or no role in the underlying contamination.

As scientific understanding evolves and statutes of limitation for abuse claims continue to be extended or eliminated in some jurisdictions, insurance remains a critical tool for responding to emerging claims. Yet many organizations, including fraternals, have limited knowledge of their historical insurance programs, particularly if they have never faced significant claims requiring a review of older policies.

The Search for Historical Coverage

Drawing on themes from this summer's blockbuster film The Odyssey, our panel emphasized that locating historical insurance policies can feel like an epic journey. Nevertheless, persistence is essential. Conducting a comprehensive search, both internally and through external sources, can help identify potential insurers early enough to provide timely notice and begin the process of locating and evaluating available coverage. Locating decades-old information only gets harder as time marches on, and organizations should consider proactively starting the search.

Why Insurance Archaeology Matters

During my portion of the presentation, I highlighted a familiar challenge. Resources devoted today to locating and organizing historical insurance policies may prove unnecessary if a claim never materializes. However, when a claim does arise, having those policies already identified and analyzed can be invaluable. Early access to insurance information can accelerate the retention of defense counsel, facilitate funding for costly litigation, and ultimately produce savings that far outweigh the costs of the policy search itself.

Many older insurance policies’ limits are not eroded by defense costs, providing an additional layer of value and protection even against meritless suits. By contrast, a fraternal organization forced to self-fund significant litigation or settlement costs may need to impose assessments on its members to address resulting budgetary or reserve shortfalls. I also discussed the many sources from which evidence of historical insurance can be uncovered, as well as the important role that insurance archaeologists and specialized coverage counsel can play in securing coverage.

Protecting the Mission

The conference served as a valuable reminder that insurance exists to protect all kinds of organizations against both known and unforeseen risks. For mission-driven organizations such as fraternals, insurance protects not only the organization itself but also the members and communities it serves. Locating and preserving historical insurance assets is an investment that many fraternals would be well advised to consider.