Loyalty bonds must cover embezzlement, says credit union

By Josh Liberatore (June 8, 2022, 2:28 p.m. EDT) – A credit union seeking to cover millions in embezzled funds has sued its fidelity bond insurers in federal court in Georgia, alleging that the insurers secretly altered the policy wording to escape “substantially any catastrophic loss” coverage without executing the changes by their underwriter or obtaining federal approval.

In a lawsuit filed Tuesday, the Southern Pine Credit Union alleged that Southwest Marine & General Insurance Co., ProSight Specialty Insurance Inc., and Coaction Specialty Insurance Group, formerly known as ProSight Global Inc., made improper changes to the fidelity bond policies they had issued in 2017. and 2020. Insurers used these changes to deny Southern Pine’s claim for…

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