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Catastrophic Losses: Plan Ahead for the Credit Union and for Members

John F. Kennedy once said the time to repair the roof is when the sun is shining. It’s good advice that still rings true today – especially for credit union leaders who may be putting off the development of a disaster response and recovery plan.  

A look at headlines this spring is evidence that disaster can strike anytime and anywhere, whether it’s the mudslides in the Pacific Northwest, tornados in Texas or the recent wildfires in Oklahoma. In fact, the National Oceanic and Atmospheric Administration (NOAA) reports that Americans live in the most severe weather-prone country on earth, with 90 percent of the declared disasters attributed to weather1

Now is a good time to develop or update your credit union’s plan to protect and restore your operation when disaster strikes. And while you’re at it, ask yourself whether you’re also prepared to guide your members through a catastrophic loss. Kriss Besch, product support manager for CUNA Mutual Group offers guidance for ensuring the credit union and members are protected.

“Don’t let past performance dictate current behavior,” advises Besch, noting that 2013 was a relatively light year for natural disasters. “Last year we had the fewest storms since 19822. And with no major storms to drive up loan losses, it’s easy to become complacent,” she says. “With a relatively late cool spring, 2014’s springtime hazards may linger longer than usual, and trouble may be just around the corner.”

Tornado season is heaviest during the spring and summer months and is most prominent west of the Rocky Mountains. Lloyd’s of London estimates that 1,200 twisters occur each year, causing $100s of millions in property damage3

Flooding is probably the most insidious of hazards, because it can occur any time as a result of seasonal or unseasonal rainfall. The National Oceanic and Atmospheric Administration (NOAA) estimates that flash and river floods alone caused more than $400 million in damage during 20124. Compounding the risk, flooding is also a common byproduct of wildfires, tornadoes and hurricanes, whether it’s flash flooding made easier in fire-stripped areas, or a tidal surge resulting from a tropical storm. 

Prepare Now

Preparing for catastrophic losses before disaster strikes is a must for all credit unions, but getting started can be a daunting task, Besch acknowledges. “Fortunately, CUNA Mutual has a number of resources, including tip sheets, white papers and staff specialists who can help.” 

A good place to start is making sure your flood zone determinations are current. Citing FEMA statistics, Besch notes that flood zone maps have changed significantly in recent years. Between 2005 and 2011, approximately 520,000 residences have moved into flood zones, while nearly 570,000 are now out of flood zones5

“Your protection may be in the wrong place,” she explains. “It’s in the credit union’s and the members’ best interest to audit your files to make sure they are current and updated annually. Ensure members understand their flood risk, and confirm coverage is in place to protect their property and your credit union’s loan risk.”

In addition to ensuring members have flood coverage on their loans, Besch recommends checking all other collateral protections and confirming they are in effect.

“It’s important to verify your members have the appropriate insurance coverage by watching for coverage deficiencies, monthly paid policies and exclusions," explains Besch. "Also confirm whether you have processes in place to pay claims when catastrophic events occur. Ask yourself how you’ll know whether your members are affected and protected, and what you will do to help them recover.”

Don’t Be the Disaster

Protecting your loans from catastrophic loss is vital, but, don’t forget to protect your credit union’s property as well, Besch adds. “Make sure you’re there for your members if disaster strikes,” she urges. “Review your property and liability insurance coverage annually, especially Extra Expense coverage limits. Industry data and CUNA Mutual’s experience suggests that coverage to help restore operations following a covered loss or disaster is the most under-insured type of property loss.”

When facing a disaster, your ultimate goal is to ensure continued financial services to your credit union members, Besch concludes.

“No one can prevent a disaster, but good planning and a knowledgeable partner can help you prepare for the worst, get you back in business and protect your member loans,” she says.

For more information and resources on risk assessment and disaster planning, visit the Protection Resource Center at There are a variety of helpful links, including a disaster preparedness assessment tool, webinars, Property and Business Liability Risk Alerts, and access to CUNA Mutual’s Disaster response team. 


1 “Storm Ready,”, May, 2014.
2 “Slow Atlantic Hurricane Season Coming to a Close,” NOAA, November 25, 2013 (Updated February 11, 2014).
3 ”U.S. Tornadoes as Deadly, Costly as Hurricanes: Lloyd’s,” Property Casualty 360, February 27, 2013.
4 “Summary of Natural Hazard Statistics for 2012 in the United States,” NOAA, 2012.
5 For Average Joes, Fighting FEMA Flood Maps Isn’t Easy or Cheap,, January 2014.
Coverages available through CUNA Mutual Group’s Collateral Protection program are underwritten by CUMIS Insurance Society, Inc., a member of CUNA Mutual Group; in partnership with State National Insurance Company; National Specialty Insurance Company, a State National company; and American Modern Insurance Group.  Real Estate protection products are brokered through CUNA Mutual Insurance Agency, Inc. in partnership with WNC First Insurance Services, Inc. Flood zone determination services are provided by ServiceLink National Flood. Product availability and features may vary by jurisdiction and are subject to actual policy language.