DUBLIN, Ohio — The assessment levied upon federally insured credit unions to cover the cost of corporate CU failures, along with the specter of new assessments, has led to a significant increase in calls to private share insurance provider American Share Insurance.
According to Dennis Adams, CEO of the private insurer, since the onset of the corporate stabilization program ASI has received inquires from 60 or 70 credit unions. "Does that mean 60 or 70 are going to switch insurance? Or course not," he told CU Journal. "We have six or seven credit unions that are in the process."
The credit unions are located in states that permit private share insurance. ASI also provides an Excess Share Insurance program to cover deposits above the federal cap of $250,000 per account. There is a "genuine interest" in ASI from CUs because many are exploring the options available to them, Adams continued. "We have not had to charge any premiums or reassessments due to the conditions we are all in. Our reserves are adequate and they are reviewed every year. We aggressively fund those reserves every year to deal with cyclical problems."
Most of the losses suffered by the CU system came from loan participations, exotic loans and the corporate system, Adams assessed. He said ASI is "outside that realm because we don't have any exotic mortgage programs and we don't insure corporates."
