Higher Rates Coming On Plastic CardsCoverage
WASHINGTON - (04/20/06) Higher insurance rates are ontheir way for plastic cards coverage for those credit unions withcredit or debit card programs, according to CUNA Mutual.Skyrocketing amounts on insurance claimsand only half ofcredit unions' costs due to card fraud are coveredmeans thatthe credit union insurer is going to have to raise rates, saidBrian Fisher, a risk management specialist for CUNA Mutual, duringCUNAs annual Payment Systems Conference. That means astricter adherence to coverage requirements; higher per-card rates;and higher annual deductibles, said Fisher. The modelwe have now just cannot be sustained. We understand itsgoing to be more painful; but it means more pain for all of us. Wejust cant continue to do business this way. He wasreferring a 56% increase in card-related losses last year to $89million, half of which was uninsured. And losses this year arealready running 25% ahead of last year. Many of the larger creditunions with the comprehensive cards programs have taken out largedeductibles of up to $1 million on their policy, in effect,agreeing to absorb the first $1 million of losses. Others still areaccruing costs to recall and reissue cards as a precaution, whichis not a reimbursable expense on most insurance policies. Among thenext steps being taken by CUNA Mutual, according to Fisher, arestricter enforcement of contract language; changes to underwriting;and best practices requirements, for both credit unions andprocessors.