I think CUNA Mutual is too successful for the good of the creditunion industry.

What if 75% of credit unions used a single security systemscompany? Imagine the power that single company would have. Let'sassume that single security company did a great job, year afteryear. Is that really healthy for the credit unions?

The natural off-shoot of the single dominant security companywould be that other security companies would soon stop marketing tocredit unions, preferring to sow in more fertile fields.

The insurance marketplace for credit unions is not far from thishypothetical. Fully 85% of the credit unions I know of are insuredby CUNA. CUNA Mutual owns the market.

On its face, this does not seem bad. Clearly, CUNA's success hasbeen, at least in part, due to the failure of other insurers.Further, CUNA customers are largely happy with the coverage,service, and price offered. I admire CUNA for its success. They cando great work for their clients. In CUNA, the credit union industryhas a partner that understands the needs of CUs and clearlyoperates to the benefit of CUs.

Let me step back and say that I do not have a dog in this fight.As an insurance consultant, I do not sell insurance and neveraccept fees or commissions from the insurers or agents I work withfor my clients. I do not care if a credit union is with CUNA orTravelers, Zurich, or OneBeacon.

But 75% of the CUNA-insured credit unions I know of have not putCUNA to the test for many years. The CUs have not had anotherinsurer compete with CUNA or they have never had anyone but theirCUNA insurance agent review their protection.

It seems that in the vast majority of CUs the CUNA renewalinsurance quote is accepted without looking at other options oropinions.

In the past five years, there has been tremendous competition inthe financial institution insurance marketplace. Has your creditunion benefited from that competition?

Most of us would not buy a car without talking with competingdealers. At the very least, we do some checking to be sure we don'tover pay. Why buy insurance without competition?

A business sector without competition leads tocomplacency-complacency by the buyer and by the seller. If the onlyexperienced insurance person who sees your insurance is your agent,how can other approaches be considered? Where do options andalternatives come from? Is a particular insurance agent's approachreally the best approach just because it is her approach?

How healthy is this for the CU? How healthy is this for theindustry? How healthy is this for CUNA?

I have nothing but respect for CUNA Mutual. However, are theyreally the best they can be with no competition?

I cannot think of an environment where exceptional performancecomes without the push of a rival. Nobody gets better at chess,tennis, basketball, or any sport without competition. The rule ofcompetitive excellence is true in business, too. Imagine what ourcomputers would look like today if the world relied on just IBM toprovide technology. What would our cars be like if Ford had 75% ofnew vehicle sales?

Again, I am not saying anything bad about CUNA Mutual. I'mquestioning a marketplace where a single supplier is predominant inproviding a critical tool. The cause of the problem is actuallyCUNA's success. If buyers do not exert competitive options, themarketplace will suffer.

Insurance is a key part of any organization's risk managementstrategy. Can the industry really allow one player to exertdomination? I am urging insurance buyers to push CUNA to greaterlevels of excellence. That push comes with competition.

There is a fiduciary issue here as well. Without due diligence,how can the leadership of a CU know that their insurance iscomprehensive and competitively priced? At time of claim, it's morethan a bit late.

Again, CUNA Mutual can do a great job for almost any creditunion they insure. However, would the pressure of competition makethem even better?

Scott Simmonds is the founder of an insuranceassurance consultancy. He can be reached at 207-284-0085 orscott@
scottsimmonds.com