OLYMPIA, Wash. — NCUA cautioned Washington State regulators about the stability of private primary deposit insurance while American Share Insurance made its case for diversity and reinsurance in separate comment letters on the state's proposal to permit private primary deposit insurance.

ASI, the sole private primary deposit insurance provider, suggested that the state's proposal suggests that an insurer would have to be the size of the NCUSIF to be "equivalent" and asked that the term be directed more toward structure and the ability to protect depositors; ASI also recommended proportionality be taken into account. "National geographic diversity" was another definition the company took issue with, recommending that other areas like membership of the credit unions should be considered. Additionally, ASI noted that part of the reinsurance provision of the proposal is not in line with industry practice.

On the other hand, the NCUA Board suggested that the equity ratio's "required minimum percent" be defined in the regulation. The federal agency/insurer also pointed out that the fund is only as strong at its stress testing and that Patelco Credit Union, ASI's largest insured credit union, would deal a major blow to the fund if a failure occurred there. Such a failure would impact all the privately insured credit unions the NCUA Board asserted and could indirectly federally insured institutions as well.