CUNA Mutual To Hike Rates On CardsCoverage
MADISON, Wis. - (05/31/06) CUNA Mutual Group, plagued bysoaring fraud-related losses on credit unions cardsprograms, announced Tuesday it is raising rates on its cardscoverage. The credit union insurer said it has filed rate increaserequests with insurance regulators in all 50 states and theDistrict of Columbia. Proposed rate increases will across all typesof cards: ATM, debit and credit. The company, which has offeredplastic card insurance since 1981 as an endorsement to its fidelitybond, is paying out about $2 in claims for every dollar in premiumscollected as credit union losses escalated 56% last year to arecord $89 million. Only about half of the losses were covered byinsurance as dozens of credit unions have adopted high deductiblesor decided to pay losses themselves so as not to build a claimsrecord. And losses in 2006 are already on track for another 33%increase to a projected $120 million. The company hopes to obtainapproval from regulators for the rate hikes for an October 1effective date and begin implementing the rate increases on arolling basis, as credit union policies come up for renewal. CUNAMutual provides cards coverage for more than 6,000 credit unionsand some 50 million cardholders.