I think CUNA Mutual did the right thing by raising deductibles and increasing premiums on credit cards. CUNA Mutual is owned by its policy owners and we collectively were losing money on this coverage. CUNA Mutual was paying losses that were the result, in too many cases, of weak internal controls at credit unions. Credit unions now have an incentive because they are taking more of the first dollar losses to build strong internal controls for their credit card operations. That means credit unions will use neural network software like Falcon; credit unions will limit expirations dates to three years in the future; credit unions will require card activation; credit unions will carefully screen new applicants; credit unions will promptly follow up on Visa notices of compromised accounts.

CUNA Mutual should be congratulated for taking a position that may not be popular but is in the best interest of all credit unions. There is no insurance company in the world that will absorb losses for the insured. Insurance companies pass on their losses in the form of higher premiums. The new coverage limits and deductibles from CUNA Mutual are designed to help credit unions protect themselves against catastrophic losses rather than the everyday losses. Credit unions now have coverage that will cost less than if CUNA Mutual absorbed all first dollar losses.

SAFE Credit Union now has a $750,000 deductible, with a $1,000 per card deductible and a $2 million aggregate loss coverage. This means we will absorb almost all of the everyday losses due to fraud on our card base. But we are protected against the big losses that might come if all of our controls are breeched. We think that is better for SAFE and for CUNA Mutual. We thank them for providing coverage that no other insurance company provides for card losses.