DUBLIN, Ohio–American Share Insurance (ASI) and Excess Share Insurance (ESI) have released a new study arguing that private deposit insurance remains a viable alternative to the federal deposit insurance system.
The companies said the study is being released as policymakers continue to debate the future of deposit protection in the wake of recent banking sector turmoil.
According to a statement from ASI, the study was authored by Glenn Grossman, a finance and entrepreneurship professor at Grace College, and examines the history and evolution of deposit insurance in the United States. The report questions whether a system established during the Great Depression remains the best fit for today’s financial services environment.
The study comes amid ongoing discussions over deposit insurance reform following the 2023 bank failures, growth in uninsured deposits and renewed debate over expanding federal deposit insurance coverage, ASI said.
Half-Century as Alternative
According to the report, private deposit insurance has served as an alternative to federal insurance for more than 50 years and is currently available to state-chartered credit unions in 10 states. ASI said it has continuously insured member deposits since 1974, providing what it described as a market-based approach to deposit protection.
The study highlights ASI’s insurance model as an example of how private deposit insurance can operate through underwriting standards, independent oversight and capital requirements. According to ASI, the report found that privately insured credit unions generally maintain strong capital positions and operate under a dual oversight structure that includes state regulatory supervision and monitoring by the insurer.
New Type of Risk Profile
“The risk profile of depository institutions today differs from that of a century ago. Moreover, the capacity to offer private deposit insurance that effectively addresses known risks and supports financial stability now far surpasses that of earlier private insurance programs,” Grossman said in the statement.
The report concludes that private deposit insurance should be recognized as a proven component of the nation’s deposit insurance framework, according to ASI. The study argues that offering private insurance as an option for states and credit unions can promote choice, innovation and financial accountability while maintaining public confidence in insured deposits.
About the Author
Grossman has more than 25 years of experience in the banking and payments industries. Before joining Grace College, he served as director of research for Cornerstone Advisors, a principal consultant with FICO, a product leader at a fintech payments startup and held product innovation and payment strategy roles at Bank of America. He also worked as an economist with the U.S. Department of Labor’s Bureau of Labor Statistics, according to ASI.
