Rule2026-16026
Termination of Excess Insurance Coverage
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 6, 2026
Effective
September 8, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) is amending its regulations that establish the requirements for obtaining and maintaining federal share insurance with the National Credit Union Share Insurance Fund (Share Insurance Fund). The provisions of this part apply to all federally insured credit unions (FICUs). This final rule will reduce regulatory burden by amending the provision on the timing of prior notice provided to members of the termination of excess non-federal insurance coverage.
Full Text
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<title>Federal Register, Volume 91 Issue 150 (Thursday, August 6, 2026)</title>
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[Federal Register Volume 91, Number 150 (Thursday, August 6, 2026)]
[Rules and Regulations]
[Pages 50688-50691]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-16026]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 741
RIN 3133-AF97
Termination of Excess Insurance Coverage
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: The NCUA Board (Board) is amending its regulations that
establish the requirements for obtaining and maintaining federal share
insurance with the National Credit Union Share Insurance Fund (Share
Insurance Fund). The provisions of this part apply to all federally
insured credit unions (FICUs). This final rule will reduce regulatory
burden by amending the provision on the timing of prior notice provided
to members of the termination of excess non-federal insurance coverage.
DATES: This final rule is effective on September 8, 2026.
FOR FURTHER INFORMATION CONTACT: Thomas Zells, Senior Staff Attorney,
Office of General Counsel, at (703) 518-6540 or at 1775 Duke Street,
Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
Part 741 generally applies to federal credit unions (FCUs),
federally insured, state-chartered credit unions (FISCUs), and credit
unions applying for insurance of accounts pursuant to Title II of the
Federal Credit Union Act (FCU Act). This part prescribes various
requirements for obtaining and maintaining federal share insurance and
the payment of insurance premiums and capitalization deposit. Subpart A
of part 741 contains substantive requirements that are not codified
elsewhere in NCUA's regulations. Subpart B lists additional regulations
that are codified elsewhere in NCUA's regulations as applying to FCUs,
which also apply to FISCUs. Section 741.5 requires a FICU that
maintains excess share insurance coverage in addition to the coverage
provided by the Share Insurance Fund to notify all members in writing
at least 30 days before the effective date of any
[[Page 50689]]
termination of that excess coverage. NCUA adopted this rule in 1986.\1\
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\1\ 51 FR 37549 (Oct. 23, 1986).
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On January 28, 2026, the Board published a notice of proposed
rulemaking in the Federal Register proposing to amend the 30-day
notification requirement in Sec. 741.5 to provide more flexibility and
reduce regulatory burden. Specifically, the Board proposed removing the
30-day requirement and simply requiring FICUs to notify members before
any excess share insurance coverage is terminated. In the proposal, the
Board noted that the 30-day timeframe imposes a prescriptive
requirement not explicitly mandated by the FCU Act. While the Board
believes members need to be notified before their excess coverage ends,
requiring 30 days' prior notice may not provide sufficient flexibility
or align with state law or contractual agreements. The Board is of the
view that these timing considerations are best left to the discretion
of each FICU board of directors and a more flexible standard would
still satisfy the goal of informing members of the change before it
occurs. The proposal did reiterate that FICUs should consider their
member agreements and applicable state law requirements when
determining adequate prior notice for members.
B. Legal Authority
The Board is issuing this final rule pursuant to its authority
under the FCU Act. Under the FCU Act, NCUA is the chartering and
supervisory authority for FCUs and the federal supervisory authority
for FICUs.\2\ The FCU Act grants NCUA a broad mandate to issue
regulations governing both FCUs and all FICUs. Section 120 of the FCU
Act is a general grant of regulatory authority and authorizes the Board
to prescribe rules and regulations for the administration of the FCU
Act.\3\ Section 207 of the FCU Act is a specific grant of authority
over share insurance coverage, conservatorships, and liquidations.\4\
Section 209 of the FCU Act is a plenary grant of regulatory authority
to issue rules and regulations necessary or appropriate to carry out
its role as share insurer for all FICUs.\5\ Accordingly, the FCU Act
grants the Board broad rulemaking authority to ensure that the
federally insured credit union industry and the Share Insurance Fund
remain safe and sound.
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\2\ 12 U.S.C. 1752-1775.
\3\ 12 U.S.C. 1766(a).
\4\ 12 U.S.C. 1787.
\5\ 12 U.S.C. 1789.
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II. Final Rule
A. Overview
This final rule follows publication of the proposed rule and takes
into consideration the comments received on the proposal. By the close
of the public comment period on March 30, 2026, the Board had received
18 public comments. Comments were submitted by individuals, national
trades organizations and state credit union leagues, a FICU, and an
association of state credit union supervisors. Twelve commenters
supported the proposal, five opposed it, and one suggested an alternate
approach. After careful consideration of the issues raised by the
commenters, the Board has decided to adopt the proposal without any
substantive change. A summary of the comments received and the Board's
responses to them are provided below.
B. Discussion of Public Comments
1. Comments in Support of the Proposed Change
Twelve commenters supported the removal of the 30-day notice
requirement to FICU members before their excess insurance coverage
ends. All 12 commenters cited the benefit of increased flexibility for
FICUs. Five commenters specifically said that the change would provide
flexibility without causing any material harm or burden to member
awareness. Six commenters said the change would provide FICU boards the
flexibility to implement notice time frames that reflect state law and
the contractual requirements of individual private insurers, including
provisions around the required time frame to notify members of excess
insurance coverage termination. One noted that a mismatch between
federal and contractual notice requirements can cause increased burdens
tracking and reconciling differing notice requirements. They said this
would reduce burdens for FISCUs by allowing them to focus compliance
efforts on state requirements, rather than reconciling competing
federal deadlines. Another commenter noted the 30-day requirement
applies even if state law mandates a different notice period. One
commenter said that removing NCUA's prescriptive rule allows states to
tailor expectations and requirements for FISCUs.
Nine commenters cited the benefits of reduced regulatory and
compliance burdens. Three commenters said the 30-day requirement can
create operational constraints and felt the proposal would better
accommodate operational realities. Eight noted the proposal maintains
the same substance, requiring FICUs to notify members before
terminating excess coverage so they can adjust accounts. Three of these
commenters stressed the proposal does not prohibit FICUs from deploying
their own, potentially longer, notification requirements, further
empowering boards to manage member agreements. One commenter expressed
support, but asked how NCUA will ensure FICUs still give members fair
and adequate warning before their insurance drops.
NCUA Response
The Board agrees with the supportive commenters that the proposal
will provide flexibility and regulatory relief without negatively
impacting member awareness. As to how NCUA will ensure FICUs still
provide members fair and adequate warning before their insurance drops,
the Board believes the requirement to notify members in advance of any
reduction of excess insurance coverage should provide members adequate
notice and an opportunity to restructure any affected accounts. The
Board stresses that this notice only relates to optional excess
insurance coverage that a FICU has purchased from a private insurer
above the minimum $250,000 in coverage provided to all FICU members by
NCUA. Any notice provided to members is unrelated to and does not
affect the share insurance coverage provided by NCUA. The Board also
reiterates that notices for termination of excess insurance coverage
are still subject to state law and contractual requirements.
2. Comments Opposing the Proposed Change
Five commenters provided comments in opposition, with three
specifically addressing this proposal. One urged the Board to either
retain the current standard or set some minimum for clarity and member
protection, reasoning that the 30-day requirement is a clear and
enforceable standard that protects FICU members compared to the
proposed ``prior to'' termination standard that the commentor opined is
vague. They felt the proposal leaves members vulnerable and could lead
to a lack of transparency and adequate time for member account changes.
Another commenter expressed vehement opposition to removing the 30-day
requirement. A third commenter strongly opposed the change, arguing
that, while it is valid to make processes more efficient, it should not
come at the cost of removing FICU member protections. The commenter
said citizens have a right to transparency about their coverage and
what is done
[[Page 50690]]
with their funds and said depositors' money should not be subject to
the preferred efficiency of CEOs and executives. Two other commenters
voiced general opposition to NCUA's deregulatory actions and expressed
that the actions inappropriately prioritized reducing regulatory
burdens at the expense of protecting consumers and the safety of FICUs.
NCUA Response
The Board appreciates the commenters expressing their concerns, but
disagrees that the change will negatively impact members or the safety
and soundness of FICUs. The Board believes that the requirement to
notify members in advance of any reduction of excess insurance coverage
should provide members adequate notice and an opportunity to
restructure any affected accounts. The Board again stresses that this
notice only relates to optional excess insurance coverage that a FICU
has purchased from a private insurer above the minimum $250,000 in
coverage provided to all FICU members by NCUA. Any notice provided to
members is unrelated to and does not affect the share insurance
coverage provided by NCUA. The Board also reiterates that notices for
termination of excess insurance coverage are still subject to state law
and contractual requirements.
3. Comments Suggesting an Alternative Approach
One commenter proposed an alternative approach, suggesting that, to
balance regulatory flexibility with consumer protection, NCUA establish
a minimum baseline notification period (for example, 10-15 days) rather
than eliminating the timeframe entirely. They felt this would still
reduce burden while ensuring members retain a reasonable opportunity to
respond to changes affecting their financial security. The commenter
expressed concern that the more flexible standard in the proposal could
result in inconsistent notification practices across institutions and
insufficient time for members to make informed financial decisions.
They worried a shorter or undefined notice period could
disproportionately impact individuals who rely on excess coverage but
may not closely monitor FICU communications.
NCUA Response
The Board appreciates the commenter's perspective and the rationale
for their proposed alternative approach. However, the Board believes
that maintaining a specific notification period would not address
potential inconsistencies with state law and contractual notice
requirements and thus would impose unnecessary burdens on FICUs. As
stated above, the Board does not believe that the proposed change will
negatively impact members or the safety and soundness of FICUs. The
Board believes that the requirement to notify members in advance of any
reduction of excess insurance coverage should provide members adequate
notice and an opportunity to restructure any affected accounts. The
Board stresses that this notice only relates to optional excess
insurance coverage that a FICU has purchased from a private insurer
above the minimum $250,000 in coverage provided to all FICU members by
NCUA. Any notice provided to members is unrelated to and does not
affect the share insurance coverage provided by NCUA. The Board also
reiterates that notices for termination of excess insurance coverage
are still subject to state law and contractual requirements.
In sum, the Board is adopting the proposed rule without substantive
change. The final rule includes a plain language change--the phrase
``prior to'' is being changed to ``before'' in revised Sec. 741.5.
This new wording does not change the regulation's meaning.
III. Regulatory Procedures
A. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), a determination must be made whether a regulatory action is
significant and therefore subject to review by the Office of
Information and Regulatory Affairs (OIRA), within the Office of
Management and Budget (OMB) in accordance with the requirements of the
Executive Order.\6\ Executive Order 13563 (``Improving Regulation and
Regulatory Review'') supplements and reaffirms the principles,
structures, and definitions governing contemporary regulatory review
established in Executive Order 12866.\7\ This final rule was drafted
and reviewed in accordance with Executive Order 12866 and Executive
Order 13563. OIRA has determined that this final rule is not a
``significant regulatory action'' as defined by section 3(f) of
Executive Order 12866.
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\6\ 58 FR 51735 (Oct. 4, 1993).
\7\ 76 FR 3821 (Jan.21, 2011).
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Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\8\ This final rule is considered an Executive Order 14192
deregulatory action.
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\8\ 90 FR 9065 (Feb. 6, 2025).
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act \9\ generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
shall publish the certification at the time of publication of either
the proposed rule or the final rule, along with a statement providing
the factual basis for such certification.\10\ For purposes of this
analysis, NCUA considers small credit unions to be those having under
$100 million in assets.\11\ The Board fully considered the potential
economic impacts of the regulatory amendments on small credit unions.
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\9\ 5 U.S.C. 601 et seq.
\10\ 5 U.S.C. 605(b).
\11\ 80 FR 57512 (Sept. 24, 2015).
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The rule will reduce the regulatory burden on FICUs by eliminating
the inflexible requirement for FICUs to notify members 30 days before
excess non-Share Insurance Fund share insurance coverage is terminated.
The Board does not expect the final rule to change FICUs' obligations
to their members materially because FICUs will still be required to
provide prior notice. Accordingly, NCUA certifies the final rule will
not have a significant economic impact on a substantial number of small
credit unions.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) generally provides that
an agency may not conduct or sponsor, and not withstanding any other
provision of law, a person is not required to respond to, a collection
of information, unless it displays a currently valid OMB control
number. The PRA applies to rulemaking in which an agency creates a new
or amends existing information collection requirements. For purposes of
the PRA, an information collection requirement may take the form of a
reporting, recordkeeping, or a third-party disclosure requirement. NCUA
has determined that the changes described in this final rule do not
create a new information collection or revise an existing information
collection as defined by the PRA.
[[Page 50691]]
D. Executive Order 13132 on Federalism
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests.\12\
NCUA, an agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order to adhere to fundamental federalism
principles. The change will reduce regulatory burden by eliminating an
unnecessary provision within NCUA's regulations imposing timing
requirements on FICUs for providing member notice when excess non-
federal insurance coverage is terminated. The change is not expected to
change FICUs' obligations to their members materially and thus the
rulemaking will not have direct effect on the states, the relationship
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government.
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\12\ 64 FR 43255 (Aug. 4, 1999).
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E. Assessment of Federal Regulations and Policies on Families
NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\13\ While the change is
intended to reduce regulatory burden generally to allow FICUs to focus
on their provision of financial services to members, any potential
positive effect on family well-being, including financial well-being
is, at most, indirect.
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\13\ Public Law 105-277, 112 Stat. 2681 (1998).
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F. Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996, also known as the Congressional Review Act (CRA),
generally provides for congressional review of agency rules.\14\ NCUA
must submit a report to Congress and the Comptroller General when it
issues a final rule, as defined by the CRA.\15\An agency rule, in
addition to being subject to congressional oversight, may also be
subject to a delayed effective date if the rule is a ``major rule.''
OIRA has determined that this rule is not a ``major rule'' within the
meaning of the relevant sections of the CRA. NCUA will also file
appropriate reports with Congress and the Comptroller General so this
rule may be reviewed.
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\14\ 5 U.S.C. 801-808.
\15\ 5 U.S.C. 804(3).
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List of Subjects in 12 CFR Part 741
Bank deposit insurance, Credit, Credit unions, Reporting and
recordkeeping requirements.
By the National Credit Union Administration Board, this 29th day
of July, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board amends 12
CFR part 741 as follows:
PART 741--REQUIREMENTS FOR INSURANCE
0
1. The authority citation for part 741 continues to read as follows:
Authority: 12 U.S.C. 1757, 1766(a), 1781-1790, 1790d, 3331 et
seq; 31 U.S.C. 3717.
0
2. Revise Sec. 741.5 to read as follows:
Sec. 741.5 Notification of termination of excess insurance coverage.
In the event of a credit union's termination of share insurance
coverage other than that provided by the NCUSIF, the credit union must
notify all members in writing of such termination before the effective
date of termination.
[FR Doc. 2026-16026 Filed 8-5-26; 8:45 am]
BILLING CODE 7535-01-P
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</html>Indexed from Federal Register on August 6, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.