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Resolution Trust Corporation: Immediate Action Is Needed to Control Insurance Costs

GGD-91-119 Published: Sep 20, 1991. Publicly Released: Sep 20, 1991.
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Highlights

GAO examined the Resolution Trust Corporation's (RTC) insurance-related policies, procedures, and initiatives, focusing on: (1) RTC actions to control insurance costs; and (2) the amount spent on inefficient and unneeded policies.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Oversight Board The RTC Oversight Board should direct RTC to move aggressively to finalize the implementation plans for the self-insurance program and present them to the RTC board of directors as soon as possible.
Closed – Implemented
The RTC Refinancing, Restructuring and Improvement Act of 1991 restructured RTC and the Oversight Board. As a result, the Oversight Board is no longer required to approve RTC policies. However, RTC began implementing its self-insurance program in March 1992.
Oversight Board If the plans call for continuing some types of private insurance, the RTC Oversight Board should require RTC to: (1) set standards for liability coverage limits, deductibles, and policy terms and conditions for those types of coverages; and (2) develop the information systems needed to effectively manage those policies.
Closed – Not Implemented
RTC, in March 1992, decided to self-insure all assets and not to rely on private insurance coverage for any of the assets.
Oversight Board The RTC Oversight Board should ensure that RTC has procedures in place to monitor the implementation of both the interim policies issued in August 1990 and August 1991 and the long-term self-insurance program when it is finalized.
Closed – Not Implemented
The TRC Refinancing, Restructuring and Improvement Act of 1991 restructured RTC and the Oversight Board. As a result, the Oversight Board is no longer required to approve RTC policies. However, RTC began implementing its self-insurance program in March 1992.
Resolution Trust Corporation RTC should review practices to ensure consistency throughout the Corporation.
Closed – Implemented
During March 1992, the RTC Executive Committee approved the implementation of a self-insurance program. RTC field offices implemented the program shortly thereafter.

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Topics

Bank failuresFinancial institutionsInsuranceInsurance cost controlInsurance premiumsInsurance regulationLiability insuranceSavings and loan associationsService contractsDeductibles and Coinsurance