As you may already know from our letter or email, PCCU is converting our deposit insurance from American Share Insurance (ASI) to the National Credit Union Share Insurance Fund (NCUSIF) on October 8th. While ASI has served PCCU members well for many years the Board of Directors felt it was time for a change.
Several factors influenced the Board’s decision. One of these factors was the addition of a federal guaranty the NCUSIF includes. ASI is a private share insurance company; chartered in Ohio, it collects funds from member credit unions to insure the deposits of their members. Because it’s a private insurance company, in the unlikely event that many of the credit unions it insures failed in a short time frame it’s possible, though unlikely, that ASI’s fund could run out of cash before it paid out all of the insured shares to credit union members. In contrast, the NCUSIF fund is backed by the full faith and credit of the United States government, and were the fund to run short the US government would step in and supply enough funding that all impacted members would recover their insured deposits.
Additionally, because ASI’s business model is similar to other insurance companies, the low interest rates of the last several years have made it difficult for ASI to earn enough from investments to support their day-to-day functions. In order to keep going ASI has to charge member credit unions “special assessments”, essentially an extra fee, to make up any budget shortfalls. These special assessments leave credit unions with less money that might be used to pay higher rates on deposits, charge lower rates on loans, or less for service fees. Converting to NCUSIF will enable PCCU to avoid paying more of these assessments, which will likely be necessary for years to come.
Otherwise the change won’t impact PCCU’s daily operations. While your deposits have always been safely insured, they will be even more secure with the addition of the federal guaranty. You can download this NCUA brochure that helps further explain NCUSIF coverage, or visit your local PCCU branch and pick one up. You can also use the NCUSIF’s Estimator tool at MyCreditUnion.gov/Estimator, plug in your information and account balances, and it will show you how well you’re covered. We’ll also be happy to answer any questions about the change, just call us at 800-582-7228!