Private Insurance Disclosure Proposal Baffles ASI

ALEXANDRIA, Va.-At the NCUA Board’s July meeting this year, the two-member board issued a proposed regulation regarding disclosures in conversions to private insurance. As written, the proposed rule would require the converting credit union to notify members in the very first communication about the conversion that deposits at the institution would no longer be backed by the federal government. NCUA would have to approve the formal notice. The proposal also states that members would be able to cash in their term savings accounts without penalty upon conversion. The membership vote on conversion to private insurance would also have to be handled by secret ballot. American Share Insurance President and CEO Dennis Adams questioned why NCUA was so worried over a few credit unions a year converting to private insurance. The proposal would also provide six months insurance coverage for members in mergers who may have accounts at both institutions totaling over $100,000. It also includes pre-merger documentation requirements.