CUNA Mutual Group Steps Up Litigation Against Individuals Responsible For Internal Fraud
From CUNA Mutual Group Public Relations
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MADISON, Wis. – The dollars CUNA Mutual Group pays in bond claims covering fraud losses by dishonest credit union employees has increased steadily since 2006, prompting the insurer to step up recovery efforts against those responsible for the losses.
The number of employee dishonesty claims has gone down, but the dollars paid for these types of losses has increased, said Tresa Loose, CUNA Mutual Group claims director.
“In 2006, CUNA Mutual paid roughly 250 bond claims due to employee dishonesty. In 2010, that number was about 200. However, claim dollars paid more than tripled, jumping from $12 million in 2006 to $38 million in 2010,” Loose said.
The increase in dollars paid is significantly outpacing the reduction in the number of claims filed. The average cost per claim increased from $50,000 in 2006 to roughly $190,000 in 2010. “Employee dishonesty claims account for 13 percent of the total number of bond claims paid by CUNA Mutual Group, but represent 45 percent of the total dollars paid.”
To recoup those payments on behalf of policyowners, CUNA Mutual Group is aggressively pursuing recovery through civil litigation against the individuals responsible for causing the losses.
Wrongdoers don’t have to be convicted of a crime, which doesn’t always occur if legal authorities choose not to press charges for whatever reason. “Our recovery efforts involve the filing of civil lawsuits, which require only a preponderance of evidence, and that’s beneficial for our recovery efforts,” Loose said. In 2011, CUNA Mutual filed approximately 30 such suits.
The insurer’s subrogation unit typically does a cost/benefit analysis on each claim and weighs the likelihood of success based upon various factors. “If there are assets available and there’s a good probability of success, we will pursue recovery.”
Recovering paid claims through civil lawsuits can help lower the cost of insurance, which can benefit policyholders collectively and individually through recouped deductibles, improved loss ratios and lower premiums, she added.
CUNA Mutual Group has always pursued recovery in these types of cases, but it’s become more important, given that losses have increased in recent years.
“It’s simply the right thing to do for the greater good of credit unions. Those perpetrating these crimes should be held accountable and repay what they stole. We will continue to aggressively pursue those that take money from our credit union partners.” Loose said.
CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual Group’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s Web site at www.cunamutual.com.
CUNA Mutual Group is the marketing name of CUNA Mutual Insurance Society, its affiliates and subsidiaries, including CUMIS Insurance Society, Inc. Product availability and features may vary by jurisdiction and are subject to actual policy language. Corporate headquarters are located in Madison, Wis..