Business Protection News transcripts

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September 2023

Risk management resources to help mitigate risks

Welcome to the Business Protection Solutions Newsletter, formally known as the P&C Minute. I’m George Teague, Property and Casualty Consultant, and I’d like to share some recent check fraud trends.

There has been a significant increase in fraudulent checks clearing member accounts. This is due in large part to the growing stolen mail problem that is impacting several states. Thieves are stealing members’ issued checks and manufacturing fraudulent checks using information from the stolen checks. Alternatively, the thieves alter the checks (payee and/or dollar amount) using check-washing techniques and deposit them elsewhere.¹

Credit unions may recover losses from members’ issued checks that are intercepted and altered by pursuing a breach of presentment warranty claim under UCC 4-208 (Presentment Warranties) against the depositary institutions that accept them. Credit unions have been successful in recovering altered check losses from depositary institutions through this process; however, it may take three to five months to receive reimbursement.

Credit unions should also notify TruStage™ of the loss to satisfy the 90-day loss reporting requirement under the Fidelity Bond and that the credit union is pursuing recovery. When the loss is reported, a claims review will take place, and coverage determination will be made. For more information on UCC 4-208 and pursuing breach of presentment warranty claims, refer to the Business Protection Resource Center.

With the exception of altered checks, credit unions typically incur a loss from the fraudulent checks created using the information from members’ stolen checks. Credit unions are obligated to return the fraudulent items by their midnight deadline. This includes counterfeit and forged drawer signature checks.

Another byproduct of the stolen mail problem has fraudsters opening fraudulent business accounts at credit unions to cash stolen checks. These checks were issued by businesses to other businesses and the fraudsters are opening business accounts in the name of the business listed as payee. Credit unions are receiving breach of presentment warranty claims from drawee institutions for accepting checks containing a forged endorsement.

The Business Protection Resource Center contains a wealth of risk management resources including our RISK Alerts, risk overviews, checklists, on-demand training and webinars, and access to partner resources. For risk mitigation strategies related to these scams, you can locate resources within the deposit account services category or search the keyword “fraud” within the RISK Alerts Library.

Of course, you can also contact a Risk Consultant directly for guidance by emailing riskconsultant@trustage.com or by calling 800‑637‑2676.

TruStage™ Insurance Products offered to financial institutions and their affiliates are underwritten by CUMIS Insurance Society, Inc. or CUMIS Specialty Insurance Company, Inc., members of TruStage Financial Group, Inc.  Some coverages may not be available in all states. If a coverage is not available from one of our member companies, CUNA Mutual Insurance Agency, Inc., our insurance producer affiliate, may assist us in placing coverage with other insurance carriers in order to serve our customers’ needs.  CUMIS Specialty Insurance Company, Inc., our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Corporate Headquarters 5910 Mineral Point Road, Madison WI 53705 CUP-3360903.14-0823-0925 © TruStage

January 2023

Risk resources to help you plan

When risk management is effective, typically nothing bad happens. But, it is very difficult to measure the value of nothing. Hi, I’m Property and Casualty Consultant Bob Norris with another P&C Minute.

Keeping ahead of the complex array of ever-changing risks, litigation trends, and compliance issues as you look for new and better ways to serve members can be a difficult task. Your credit union requires keen awareness, effective preparation, and loss control scrutiny.

While each credit union has its own unique risk foot-print, TruStage’s Risk Consultants are ready to assist you in rethinking and prioritizing your risks, loss control plans, and your protection. Even on new or enhanced services you’re considering — services like virtual banking, P2P payments, remote work arrangements, business lending, and ATMs with advanced transaction capabilities just to name a few.

In fact, as a TruStage bond policyholder, you have access to exclusive risk resources to help you plan.

Start with the Business Protection Resource Center where you’ll find valuable insights in RISK Alerts, risk overviews, on-demand training & education, and access to partner resources on a variety of risks. All focused on helping credit unions like yours to stay-in-the-know on relevant, emerging risks and mitigation tips.

In fact, you can ask a risk consultant your questions and receive personalized guidance based on exclusive insights from their work with thousands of other credit unions. Simply contact them directly by email at riskconsultant@trustage.com for a one-on-one discussion.

Make no mistake, planning ahead can help new endeavors run much more smoothly, and best of all, the risk resources and consultation from TruStage’s Risk Management team come to you at no additional cost.

So, don’t let not knowing which emerging risks are around the corner take the blame. Allow TruStage to help you peer around corners to identify uncertainties that may impact your organization’s ability to achieve its objectives. Contact a risk consultant at riskconsultant@trustage.com or contact your sales team for more information.

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Insurance products offered to financial institutions and their affiliates are underwritten by CUMIS Insurance Society, Inc. or CUMIS Specialty Insurance Company, members of the CUNA Mutual Group. Some coverages may not be available in all states. If a coverage is not available from one of our member companies, CUNA Mutual Insurance Agency, Inc., our insurance producer affiliate, may assist us in placing coverage with other insurance carriers in order to serve our customers' needs. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. CUP-3360903.12-1222-0125 © CUNA Mutual Group

November 2022

Stolen mail leads to check fraud

While cybercrime has generated a lot of attention, a low-tech fraud trend has emerged in recent months – a surge in stolen checks that ultimately leads to check fraud losses for credit unions. Hi, I’m Kim Donaca, Casualty & Property Consultant, with another P&C Minute.

Mailboxes — both personal and blue USPS boxes — are increasingly becoming the scene of crime. And, after the mail theft has occurred, the criminals sift through mail to locate checks in which the payee and/or dollar amount can be altered and negotiated elsewhere. Alternately, the thieves manufacture fraudulent checks based on the members’ original checks.

While you might want to encourage your members to pay bills online, mail checks inside the post office lobby, and log into their accounts frequently to review transaction history; your credit union will also want to consider recourse.

Credit unions may be able to recover losses from members’ issued checks that are stolen, altered, and negotiated elsewhere by pursuing a breach of presentment warranty claim against the financial institutions that accept them. According to Section 4-208 of the model Uniform Commercial Code, when a financial institution accepts a check for deposit or payment, it makes certain warranties to the credit union in which the check is drawn.

One of these warranties is that the check has not been altered. So, when a financial institution accepts a member’s check that has been altered, it is generally liable for the loss.

If your credit union has incurred such losses from members’ issued checks that are stolen and altered, or you simply want to learn more about check fraud and how to pursue a breach of presentment warranty claim, you can contact a TruStage Risk Consultant for guidance. You can reach them by sending an email to riskconsultant@trustage.com. Or call us at 800.637.2676, select you’re a credit union, then choose option 4.

September 2022

Learn more about TruStage's panel counsel

Successfully defending and litigating complex claims for our insureds requires significant experience and background in commercial general liability, employment practices, and lender liability among others. That’s why TruStage’s panel counsel is hand selected and among the most experienced insurance defense counsel in the credit union industry.

Hi, I’m property & casualty consultant, Susan Thompson, with another P&C Minute.

Generally, TruStage has the right and duty to provide our insureds throughout the country with a defense. We take that responsibility seriously throughout the life of all litigated matters. Membership on the TruStage panel counsel is not automatic and occurs only after extensive vetting performed by our litigation management team.

You can rest assured that part of that vetting includes ensuring counsel understands the credit union community and its purpose. This also includes ensuring selected counsel are up to date on the trends and exposures faced by our insured credit unions. The panel counsel list evolves on a regular basis with law firms and attorneys brought on or removed from the panel based on the experience they provide and the results they’ve obtained.

Our litigation philosophy is that we hire the attorney — and not the firm — looking to always ensure that we will not be outlawyered by the plaintiff bar.

Of course, communication is key! The panel counsel is responsible for reaching out to their client and you as the insured credit union immediately upon their assignment. The goal…to keep both of us abreast of what to expect throughout the course of litigation and the life of your claim. At any time, you feel you’d like additional communication, you have an immediate, direct connection to your claim handler.

And, to streamline processes for you, timely submission of invoices occurs through an advanced online billing technology allowing our staff to carefully review without you having to sort through them.

Being named as panel counsel is not easy — especially when it means litigating for TruStage’s credit union insureds. We are proud of the results of our panel counsel and appreciate the many successes they’ve assisted credit unions with.

If you’d like more information, contact your TruStage sales team.

July 2022

Insure to value

Supply chain disruption has contributed to a rapid growth of inflation that has affected all walks of life, with shortages reported of such everyday items as computer chips, bathroom tissue, infant formula and various types of food products, among many others.

Hi, I’m Property and Casualty consultant, Kevin Roddick, with another P&C Minute.

Over the past two years, environmental and economic factors have driven surges because of a few factors, including: a broken supply chain impacting the cost of construction materials like lumber and steel, labor shortages in the construction and transportation sectors, and high inflation.

Shortages and delays have also affected credit unions, especially as they renovate existing buildings or build new ones. In fact, overall commercial building costs have risen over 20% in the last year.

Another significant issue is the undervaluation of the costs to replace a damaged building and equipment. The key for credit unions is to insure buildings to replacement cost value, so that there is adequate insurance available to replace each building when a loss occurs. An important step in evaluating risk is having the right values; however, the challenge is that valuations are a just a “snapshot at a point of time,” so you must be diligent in making certain that those limits are regularly reviewed.

Policyholders with Property & Business Liability coverage underwritten by CUMIS Insurance Society, Inc., can get some help in determining proper limits. Through an Insure-To-Value software program complete with TruStage and Marshall & Swift insights, data is updated monthly by zip code. This data is attributed to credit union locations and shared with you on an annual basis.

As you review your property locations listed on the Property & Business Liability policy, carefully compare current limits and suggested amounts from the Insure-to-Value Analysis. This can help ensure you have adequate limits and minimize the chance that you’ll get stuck with paying uncovered losses.

As always, your TruStage sales team is available to answer questions and provide guidance as you go through the process.

May 2022

Emerging Risks Outlook

When risk management is effective, typically nothing bad happens. But, if you’re blindsided by a problem, your credit union reputation usually takes the hit. Don’t let not knowing which emerging risks are around the corner in order to take the blame.

Hi, I’m Property & Casualty Consultant, Bob Norris, with another P&C Minute.

Keeping ahead of the complex array of ever-changing risks, litigation trends, and compliance issues that are impacting credit unions requires keen awareness, effective preparation, and loss control scrutiny. And, while each credit union has its own unique risk footprint, knowing which risks and loss trends that are impacting credit unions across the nation should be on your radar.

So, where should you begin? What are those emerging risks that you have to keep your eye on?

Drawing upon thousands of insights from credit union risk consultations and claims over the last 12-18 months, our Risk Management team at TruStage put together a series of web pages where you’ll find emerging risks, key questions, and discussion points to address at your credit union. Each topic concludes with related resource links to provide you with an in-depth look at the risks and proven mitigation guidance. Simply visit Emerging Risks Outlook.

This Emerging Risks Outlook series examines hot topics such as overdraft/NSF fee litigation, Zelle/P2P fraud, ATM smash and grabs, remote work, marijuana banking, and due diligence to name just a few. All-in-all, there are currently 14 emerging risks covered with more being added throughout the year.

If you haven’t already considered some of these risk themes and takeaways in involving your risk oversight focus for 2022, then you should consider their relevance to your credit union’s strategy and ask why not.

Remember, risk management shouldn’t be the department that says no, but rather the function that helps shape credit union decisions and enables successful execution of your strategies. All with the emerging risk universe in mind.

For more information, be sure to contact your TruStage sales team.

March 2022

Ransomware in the cyber marketplace

Ransomware attacks continue to be carried out against industries of all types and sizes — including credit unions — and political unrest throughout the world has only served to magnify the threat.

Hi, I’m Property & Casualty Consultant, Nathan Cox, with another P&C Minute.

Frequently coupled with malicious email or targeted phishing, malware enters the soon-to-be-infected computer system, and encrypts data, making it unusable until a ransom is paid, and the bad actors provide an unlocking code.

As ransomware attacks continue in both frequency and severity, the potential exists for the cyber liability marketplace to take steps such as reduced coverage and limits, integration of coinsurance requirements, increased retentions, and even higher premiums.

But credit unions are not defenseless against ransomware and can take steps to help mitigate their risk. A critical element is Multi Factor Authorization, as is routine scanning of email and attachments, critical patching, and sophisticated Endpoint Protection. Employee training and awareness is key, and your TruStage Sales Team can help guide you to available resources, including those offered by cyber liability insurance carriers, cyber security vendors and TruStage’s Risk Management & Compliance Team.

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