Michigan State No Longer Has Insurance for Sexual Misconduct Liabilities Post-Nassar Scandal
Nine months after Michigan State University agreed to pay a $500 million settlement to the 332 women and girls, who were sexually assaulted by sports doctor Larry Nassar, the Wall Street Journal reports that the school’s new insurance policy “broadly excludes insurer liability for sexual misconduct.”
That means that the university will have to use its own money to pay out any negligence or liability related to sexual misconduct, threats of sexual misconduct, failure to report, and mismanaged internal investigations (or lack thereof).
A Michigan state prosecutor alleged that MSU president Lou Anna Simon knew that Nassar had been accused of sexual misconduct in 2014 and failed to act. Although Simon denied the charged to the police in May, she resigned earlier that year—hours after Nassar’s sentencing hearing, during Olympic gold medalist Aly Raisman was among 156 victims who testified.
Nassar pleaded guilty to seven counts of criminal sexual conduct in January 2018 and was sentenced 40 to 175 years in prison by Judge Rosemarie Aquilina, who noted it was “an honor and a privilege” to sign his “death warrant.”
After failing to reach a general liability agreement with its insurer of 18 years, the WSJ reports that MSU created its own captive insurance company under Aesir Insurance Co. called Lysander Insurance.
Spokesperson Heather young told the WSJ that the school “continues to assess its insurance coverage and self-insurance programs to best protect the university’s interests going forward.”
The university did not immediately respond to Fortune’s request for comment.