Ohio’s IH CU the latest to switch to private share insurance

A “resounding majority” of the members at Springfield, Ohio-based IH Credit Union have approved a proposal to convert from NCUA deposit insurance to private share insurance, joining a growing number of CUs who are abandoning federal deposit insurance.

As a result of the conversion, IH will be regulated by the state of Ohio rather than NCUA.

In a letter on its website, the credit union explained that it currently has a “cushion” of $50 million from a balance sheet perspective in order to protect its membership against loss of funds. “We would somehow have to lose all $50 million before we would even need deposit insurance,” IH CU stated.

The letter notes that the credit union was “forced” to pay almost $1.3 million to the regulator to shore up the National Credit Union Share Insurance Fund as a result of the financial crisis, during which time “the NCUA essentially went bankrupt,” the CU said. ASI, on the other hand, “only provides deposit insurance to financially healthy credit unions,” whereas NCUA insures credit unions regardless of their financial health.

“Insuring a pool of healthy credit unions is like insuring a pool of healthy people; there is a much, much smaller chance for large insurance claims,” the IH letter said, adding that in-state representation will better serve the CU’s members than NCUA.

“We believe that the people in Columbus have a much better feel for what is happening in Springfield than government bureaucrats in Washington, D.C.,” the credit union said.

IH is the latest in a growing number of credit unions that have converted to private share insurance, most notably Glendale Area Schools FCU and Alliance FCU last year.