Opinion ID: 411167
Heading Depth: 3
Heading Rank: 1

Heading: Insurance Endorsement

Text: 63 LCUL asserts that its endorsement of CUNA/CUMIS insurance coverage contributes importantly to the initiation, growth, and stability of credit unions in Louisiana and therefore is substantially related to its exempt function. Basically, the League's argument is that by encouraging the use and purchase of insurance by credit unions, it strengthens the credit union movement by reducing the likelihood of credit union failure from unforseen events. The district court found that the connection between the furtherance of the credit league movement and the selling of insurance is at best tangential. Louisiana Credit Union League v. United States, 501 F.Supp. 934, 941 (E.D.La.1981). We agree. Insurance endorsement and administration is not the sort of unique activity that satisfies the substantial relationship test, nor are its benefits inherently group-related. Rather than merely advising its members of the availability and desirability of insurance coverage to credit unions generally, LCUL promoted the purchase of policies from a particular carrier, CUNA/CUMIS. The district court observed that LCUL's insurance activities did little more than generate revenue for the League and provide CUNA/CUMIS with convenient services in the marketing and administration of its programs. Because the League's insurance endorsement is basically a fundraising activity, it is by definition unrelated business activity under section 513(a). We therefore affirm the holding below that LCUL's trade or business of insurance endorsement and promotion was not substantially related to its exempt function. Accord, Professional Insurance Agents v. Commissioner, 78 T.C. 246 (1982); Long Island Gasoline Retailers Association v. Commissioner, 43 T.C.M. (CCH) 815 (1982); Rev.Rul. 60-228, 1960-1 C.B. 200. 22