MADISON, Wis - Although New York-based Municipal Credit Union could not have made a claim for insurance money to make up for its recently revealed $15 million loss to ATM fraud, and even though the U.S. Congress has yet to resolve the terrorism insurance issue, CUNA Mutual reiterated its commitment to insure credit unions against terrorism related losses. "I think it's very important for everyone to understand that CUNA Mutual is not pulling out of New York or anywhere else that might be a terrorism risk," said Sydney Lindner, CUNA Mutual spokesperson. Lindner explained that two factors prevented Municipal CU's most recent losses associated with the September 11 attacks from being covered by insurance. First, the insurance policy does not cover losses that arise from a credit union member's use of their own ATM card and, second, the policy does not cover losses that arise from a credit union's own policy, Lindner explained. Because Municipal's board had decided to tell its network, the New York Cash Exchange (NYCE) to continue the "stand in" policy and even to increase the limit of cash allowed to be withdrawn in one day, their action precluded making an insurance claim for the loss, she explained. A claim would have been additionally blocked because the people committing the fraud were doing so with their own ATM cards, she added. Lindner made clear, however, that while Municipal could not claim its ATM losses, CUNA Mutual had helped the credit union with its other losses after the September 11 attack and had been instrumental in helping the credit union regain some of the lost equipment and supplies that allowed it to open for business again. She also said that CUNA Mutual was maintaining its ongoing relationship with Municipal and all the other credit unions damaged or affected by the terrorist attacks. Manhattan based Municipal CU, with headquarters across from the former Twin Towers of the World Trade Center, lost much of its record keeping and data processing capability, as well as its connection to the NYCE network, when the planes brought the towers down. Acting, it said, out of concern for its members, many of whom are New York City police and fire service personnel and their families, the credit union allowed the NYCE network to continue to allow withdrawals by credit union members even though it could not verify the funds were available. Four thousand credit union members, out of almost 300,000, overdrew their accounts by at least $100 and the 100 account holders with the most egregious overdrafts have been arrested or are being sought for arrest. Municipal said that it has recovered over 50% of its $15 million loss from the overdrafts and never sought to file an insurance claim. Lindner acknowledged that one reason CUNA Mutual felt it had to reiterate its commitment to cover credit unions is because the issue of terrorism insurance coverage has still not been resolved after the 2001 attacks and that Congress had not finished debating measures meant to stabilize the market for that coverage. In the absence of congressional action some insurance firms have been either withdrawing coverage for terrorist attacks from areas of the country deemed to be higher risk or have been making that coverage very expensive. Lindner said CUNA Mutual had done neither and had no plans to do so whether or not Congress acted. Congress came back into session after its long August recess and Larry Blanchard, CUNA Mutual's senior vice president for corporate and legislative affairs, reported feeling confident that the Congress would complete a terrorism insurance bill before the end of September. "I gave up long ago trying to predict what the Congress might do with an individual issue but there are a number of positive signs," Blanchard said. Blanchard pointed out that both the House and the Senate have passed measures addressing the terrorism insurance problem and that both are committed to getting something done to remedy the problem. He further pointed out that both the chambers had appointed members from the banking (or financial services in the House) and judiciary committees to a conference committee to resolve the differences in the two bills. He also said congressional staff have been negotiating the details of a final bill even though the congressional members did not meet during the recess, "so work has been ongoing" on the issue, he said. On the negative side, the terrorism measure is only one of the contentious issues facing the Congress in the short time it has between now and when it breaks for campaigning and the November elections. None of the 14 budget bills that fund different parts of the government have been completed and the Congress may be distracted by a fight over government reorganization to fight terrorism and possible war with Iraq. But Blanchard pointed out that the more time the Congress takes with this, the greater the possible damage could be. As the weeks pass more and more public buildings, stadiums, monuments and other facilities are losing their terrorism coverage and the impact cannot help but affect the overall economy. "From the beginning we have feared the domino effect on the insurance question," Blanchard said, as more construction projects, public works projects and private industry begin to have to close because of lack of liability coverage in the case of a terror attack. -firstname.lastname@example.org
One year after September attacks, insurance questions still nag; Municipal FCU's $15-million 9/11-related loss not covered
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