Two of the credit union industry's big names in insurance aretangled up in a legal battle over allegations of defamation, unfairmarketing practices and attempts to steal customers, according to alawsuit filed in Wisconsin circuit court on July 26.

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According to the complaint, the beef between Madison, Wis.-basedCUNA Mutual Group and East Windsor,Conn.-based Insuritas revolves around a July 20 articlewith the headline “CUNA Mutual Group Leaves Credit Unions Behind inShift to Direct-to-Consumer Strategy” that Insuritas allegedlyauthored and posted on its website. It claimed CUNA Mutual Groupand its subsidiary, TruStage, have failed to tell credit unionsthat TruStage offerings are no longer just for members only.

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“TruStage has recently carefully added language throughout theirconsumer-facing website noting that many of the products they offerare no longer tied to credit union membership, yet have allowedtheir credit union partners to continue to promote the TruStageprogram as an exclusive benefit for credit union members,” the postclaimed. “In fact, the website you may be directing your members totoday educates your members on the fact that they can takeadvantage of TruStage products regardless of their current orpotential membership in your credit union.”

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“TruStage leverages your member data for their use — not yours.This shift represents a breach of trust between CUNA Mutual Groupand the credit union movement,” it also alleged.

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In its court complaint, which asked for unspecified damages,CUNA Mutual Group strongly denied the claims.

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“The TruStage Insurance Program provides Accidental Death andDismemberment insurance, covering credit union members, exclusivelyto participating credit unions,” CUNA Mutual explained. “It alsoprovides exclusive discounts to credit unions for automobile andhome insurance. The assertion that the TruStage Insurance Programdoes not offer exclusive benefits to credit union members is flatout false.”

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In a statement to CU Times, CUNA Mutual Groupspokesperson Phil Tschudy said Insuritas's statements weremalicious and were intended to harm its contractual and customerrelationships.

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“Of particular concern is the assertion in the article that,through the TruStage Insurance Program, CUNA Mutual directlycompetes with credit unions. That is false,” he told CUTimes. “TruStage has continued to expand its media to reachmembers and potential members about the availability of thesefinancial products. In the consumer marketing CUNA Mutual doesthrough TruStage, credit union customers are compensated based onsales to their members. Any policy sold to a credit union memberincreases the value of that credit union's endorsement of theTruStage Insurance Program, resulting in additional royalty income to the creditunion.”

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CUNA Mutual Group said it wants Insuritas to take down the post,publish a retraction in its place and send retractions to everycredit union that received an emailed copy from Insuritas,according to the complaint.

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Insuritas CEO Jeffrey Chesky said he simply wants CUNA MutualGroup to acknowledge that TruStage isn't a members-only propositionanymore. He is undeterred by the suit against his company and thefact that the suit names him personally.

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“We suspect this is just their latest attempt to stop creditunions from owning their own insurance agencies,” he told CUTimes. “The issue is too important and our credit unionclients, their five million plus members, aren't going to beintimidated by a lawsuit that complains about the fact that we'reexposing the facts about the move that CUNA has made.”

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Chesky also said some credit unions have become concerned aboutthe language on their own websites.

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“You have obligations as a financial institution to be veryclear about what is available to your member and frankly we'resurprised that CUNA Mutual, through its behavior, may be exposingcredit unions to UDAAP reviews,” he said.

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“All I know is I wouldn't want to be dealing with the insuranceand financial services commissioner in New York, California, Texas,Florida, Illinois,” he noted. “They have no patience for what theymight deem as advertising claims that are not accurate.”

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Chesky said CUNA Mutual Group has been a positive force in thecredit union movement for decades. “They just made a tacticalmistake and rather than owning up to it and being transparent withthe credit union movement, now they're trying to, I don't know,they don't want to talk about it. They want to point fingers atus,” he said. “Like I say, that's okay. We're going to continue ourfight and continue to grow.”

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