Without Competition, Has CUNA Mutual Become Too Powerful?
I think CUNA Mutual is too successful for the good of the credit union industry.
What if 75% of credit unions used a single security systems company? Imagine the power that single company would have. Let's assume that single security company did a great job, year after year. Is that really healthy for the credit unions?
The natural off-shoot of the single dominant security company would be that other security companies would soon stop marketing to credit unions, preferring to sow in more fertile fields.
The insurance marketplace for credit unions is not far from this hypothetical. Fully 85% of the credit unions I know of are insured by CUNA. CUNA Mutual owns the market.
On its face, this does not seem bad. Clearly, CUNA's success has been, 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 can do great work for their clients. In CUNA, the credit union industry has a partner that understands the needs of CUs and clearly operates 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 never accept fees or commissions from the insurers or agents I work with for my clients. I do not care if a credit union is with CUNA or Travelers, Zurich, or OneBeacon.
But 75% of the CUNA-insured credit unions I know of have not put CUNA to the test for many years. The CUs have not had another insurer compete with CUNA or they have never had anyone but their CUNA insurance agent review their protection.
It seems that in the vast majority of CUs the CUNA renewal insurance quote is accepted without looking at other options or opinions.
In the past five years, there has been tremendous competition in the financial institution insurance marketplace. Has your credit union benefited from that competition?
Most of us would not buy a car without talking with competing dealers. At the very least, we do some checking to be sure we don't over pay. Why buy insurance without competition?
A business sector without competition leads to complacency-complacency by the buyer and by the seller. If the only experienced insurance person who sees your insurance is your agent, how can other approaches be considered? Where do options and alternatives come from? Is a particular insurance agent's approach really the best approach just because it is her approach?
How healthy is this for the CU? How healthy is this for the industry? How healthy is this for CUNA?
I have nothing but respect for CUNA Mutual. However, are they really the best they can be with no competition?
I cannot think of an environment where exceptional performance comes without the push of a rival. Nobody gets better at chess, tennis, basketball, or any sport without competition. The rule of competitive excellence is true in business, too. Imagine what our computers would look like today if the world relied on just IBM to provide technology. What would our cars be like if Ford had 75% of new vehicle sales?
Again, I am not saying anything bad about CUNA Mutual. I'm questioning a marketplace where a single supplier is predominant in providing a critical tool. The cause of the problem is actually CUNA's success. If buyers do not exert competitive options, the marketplace will suffer.
Insurance is a key part of any organization's risk management strategy. Can the industry really allow one player to exert domination? I am urging insurance buyers to push CUNA to greater levels 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 is comprehensive and competitively priced? At time of claim, it's more than a bit late.
Again, CUNA Mutual can do a great job for almost any credit union they insure. However, would the pressure of competition make them even better?
Scott Simmonds is the founder of an insurance assurance consultancy. He can be reached at 207-284-0085 or scott@