This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the top of any article.
From the March-20, 2002 issue of Credit Union Times Magazine • Subscribe!
Progressive pulls the plug on its CU bond program; market continues to be dominated by CUNA Mutual
<p>MAYFIELD VILLAGE, Ohio - Insurer Progressive is phasing out its credit union bond program for good. In a market dominated by CUNA Mutual Group, which currently holds 95% of the market share, Progressive was one of the few insurers that provided surety bonds to credit unions. The Credit Union Insurance Alternative, underwritten by Progressive Insurance had offered credit unions Bond, D&O, Employment Practices Liability and other related coverages with limits up to $10 million. Despite rumors that Progressive's exit from the credit union bond and D&O insurance market was dictated by the American Bankers Association, which endorses Progressive's bond coverage, Progressive issued a statement maintaining that "this decision was based on our not reaching targeted financial goals." According to Allied Solutions Specialty Lines Division President Patrick Touhey, it is so "off-base" to believe that the ABA "brought down a big hammer" on Progressive CU bond activity. "I wrote the letter in question that was referenced as `evidence'," said Touhey. "Internal not external ABA pressures pushed Progressive to separate the ABA and CU bond departments, which had been previously functioning as one unit." Touhey says that once the units were separated there was an emphasis on bringing in new credit union business, but the company was unable to dedicate the "resources, time and energy to successfully penetrate the credit union market" as a stand-alone unit. Progressive, will non-renew all active accounts at their next renewal date and will not penalize credit unions that choose to change to another carrier prior to their expiration date with any early termination fee, and will return all unearned premium on a pro-rata basis. Progressive entered the bond market in 1997 and provided benefits to approximately 400 credit unions throughout 35 states over the past four years. "In exiting the bond market, Progressive is confident that we have succeeded in creating a competitive and open market that will continue to offer a choice of both carriers and products to credit unions of all sizes throughout the country," stated the insurer. With Progressive's exit, the Warren, New Jersey-based Chubb Group has stepped up as the next contender and Touhey says it is time for credit unions to make a decision of whether they truly want a competitive bond market or not. "It is completely within the control of the credit union movement," said Touhey. "Credit unions have to decide if they are really going to take advantage of the available alternatives or simply use competitors as little more than a leveraging tool in negotiations with CUNA Mutual. If it is the latter then everyone loses." -email@example.com</p>
Want the latest credit union news?
Sign up for our free newsletter today! All the breaking credit union news and information you need to make the right decision for your credit union delivered to your inbox. For free!
Thanks for subscribing, you will start receiving the Daily News Alert tomorrow!