LAS VEGAS - USF&G Corp. is vowing to break Cumis Mutual Insurance Society's virtual monopoly of the credit union surety bond business.
Representatives from both companies debated the attributes of their products before members of the National Association of State Chartered Credit Unions, which held its annual meeting here.
The participants - Theodore G. Parks for Baltimore-based USF&G and Kevin G. Shea for Madison, Wis.-based CUNA Mutual - never rose their voices, but each took swipes at the other's product while painting themselves as friends of credit unions.
Portraying USF&G as the "new kid on the block" in the credit union surety bond arena, Mr. Parks said the insurance company is trying to break the Cumis monopoly of the market. Cumis is a subsidiary of CUNA Mutual Insurance Group.
Cumis provides surety bonds for about 98% of the industry.
Mr. Parks went on the attack, criticizing Cumis for raising premiums when premiums for bank surety bonds had dropped.
Mr. Shea countered, saying premiums were rising as risk increased for credit unions. Then he suggested that USF&G would discontinue its fledgling credit union surety bond if the program didn't prove profitable.
Mr. Parks denied the charge. "We're taking a very long-range view of this program, and we're going to let it grow," he said.
Mr. Shea also said that it would seek input from credit unions on how to improve its product during a series of town meetings.
Surety bonds insure against a loss due to fraud or theft and are required for every federally insured credit union by the National Credit Union Administration.
The NCUA approved USF&G to provide surety bonds in June, marking the first new entry to the market since 1976. The policy is sold through San Diego-based John Burnham & Co.
Pricing on the USF&G bond is calculated through individual risk assessments, while Cumis works according to an industry-wide pool.
USF&G also recently began offering directors and officers insurance, underwritten by Reliance National Insurance Co. Cumis dominates this market as well.