MADISON, Wis. -
"It's kind of hard to tell," said CMG CEO Jeff Post. "When we raised rates in October, a number of credit unions chose higher deductibles to keep their premiums flat or down. So some simply don't bother to file a claim because they don't think they're going to hit their deductible. So, our reports are down, and part of that could be due to better security in place and better awareness, but we also know that in changing those deductibles, we've probably changed some behaviors, as well. But even though claims were down in the second half of 2006 compared to the first half of the year, overall, credit card losses were still up in 2006 from 2005."
At one point last year, Post had told the Credit Union Journal it may have to get out of the credit card insurance business, but for the moment, at least, that's not going to happen. "We are still offering coverage," he said. "Yes, it's more expensive, but we are trying to expand our coverage to allow credit unions to have higher limits. To that, I have to get reinsurance, first, but I'm just not sure it's insurable."
But given CUNA Mutual's 36% increase in earnings during 2006, is all the hoopla over credit card losses really that big of a deal?
"It's a big deal because credit unions might not be able to stay in plastic if they can't get insurance," he said. "Yes, we had a really good year, but it's against the law to subsidize one insurance product with another. It's a crisis because we had to raise the rate 180%, and our loss ratio is still at 200%."
