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4000 - Advisory Opinions

FDIC's View of the Purchase of Excess Deposit Insurance from Private Insurance Companies


October 12, 1993

Jeffrey M. Kopchik, Counsel

This is in response to your September 7, 1993 letter to Mr. Claude A. Rollin, Esq. You have inquired whether federally chartered banks may purchase supplemental deposit insurance from a private insurance company to insure certain deposit accounts in excess of $100,000.

Your question raises two issues. First, do national banks have the power to purchase such private excess insurance pursuant to federal law as interpreted by the Comptroller of the Currency. Second, as insurer of national banks, does the FDIC object to the purchase of such excess insurance.

With regard to the first issue, I am not in an appropriate position to comment concerning the powers of national banks. However, it is my understanding that the Comptroller has opined that national banks may purchase such excess deposit insurance from private insurance companies. I suggest that you confirm this with the OCC. With regard to the second issue, it is my opinion that no legal impediments exist to such an activity provided that the limits of federal deposit insurance coverage are accurately communicated and that depositors clearly understand that such excess insurance is not provided by the FDIC. Please keep in mind that Reports of Examination prepared by the FDIC are confidential documents which may not be made available to an insurance company offering to underwrite excess deposit insurance coverage.

I trust that this letter is responsive to your inquiry.

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