OLYMPIA, Wash. -
Private insurance was abolished a decade ago after the 1991 RISDIC crisis-surrounding the failure of the Rhode Island Share and Deposit Indemnity Corp.-shattered public confidence in the private insurance system. As many as half a dozen private insurers for credit unions folded after the RISDIC crisis with legislatures in more than a dozen states mandating federal insurance. Still, 26 states continue to allow state-chartered credit unions to have private insurance that is equivalent to federal insurance.
But the private insurance option has made somewhat of a comeback over the last year, with the reinstatement of the option in Texas, and now in Washington, which expects to once again allow private insurance by next year.
Now, of course, there is only one option for private insurance, ASI, the Dublin, Ohio, insurer that was approved to enter the Texas market last year. Dennis Adams, president of ASI, has carefully maintained a low profile since the bad publicity of the 1990s, but said recently his company is eager to enter states where there is a proven market. Washington and Texas are the only ones where they are working to enter, said Adams, whose company provides excess insurance-that over the $125,000 maximum per account covered by NCUA-to credit unions in more than three dozen states.
The Washington bid was prompted by a request from five credit unions, who wrote the Department of Financial Institutions and asked for a new alternative to the National CU Share Insurance Fund administered by NCUA. While the five credit unions: SHARE CU, Kings County CU, School Employees' CU of Washington, Seattle CU Center and Harborstone CU, did not commit to converting to private insurance, they all agreed that the option should be explored.
The FDI plans to hold a public hearing on its proposal next month, then approve a final rule sometime in May. The final rule is expected to become effective in July.
