FDIC Quarterly 42 2010, Volume 4, No. 2

or through a bankruptcy court.4 The receivership 

process has two parts: recovering value from the failed 

bank’s assets and paying claims (see Figure 1). The 

receiver sells the bank’s assets and returns recovered 

funds to the bank’s claimants according to established 

protocols on seniority. Claimants include depositors, 

general creditors, subordinated debt holders, and shareholders.5

 Claims against the receivership may also arise 

4

 In most countries, bank failures are administered by the court system 

through the bankruptcy process. A third party that is not a creditor of 

the failed bank is appointed as the receiver or bankruptcy trustee. In a 

few countries, however, the deposit insurer may be appointed as 

receiver operating under the judicial process. In still others—notably 

the United States and the Philippines—the deposit insurer is appointed 

as receiver and operates through an administrative process. 

5

 General creditors include vendors, suppliers, and contractors of the 

failed bank; employees; and lease holders. A claims priority, established in law, determines the order in which claimants are paid from 

the receivership. For example, in the United States depositors are 

given preference over other claimants. This allows the Federal Deposit 

Insurance Corporation (FDIC), standing in the place of insured depositors, and uninsured depositors to be paid from the liquidation of the 

failed bank’s assets before the general creditors. 

A fundamental goal of most deposit insurance systems is 

to contribute to financial stability. However, establishing a deposit insurance system will not improve financial sector resilience unless depositors are confident that 

the system will work. Indeed, depositor confidence is 

key to preventing individual bank failures from escalating into a systemic banking crisis.

This article discusses the deposit insurance claims 

process, whereby insured depositors are reimbursed 

when a bank fails.1 The article reviews the role of 

deposit insurers in a bank failure as well as their responsibilities in the claims process. It also reviews the basic 

tools that deposit insurers need to satisfy the claims of 

insured depositors (and others) and the procedures 

commonly followed in the claims process. Finally, the 

article explores the claims process of deposit insurers in 

Canada, the Philippines, the Russian Federation, and 

the United States.

When a Bank Fails: The Deposit Insurer’s Role

A number of steps are involved in winding up or liquidating the business and affairs of a failed bank.2

 First, 

the resolution authority determines a methodology for 

handling the failed bank. That methodology may 

include the purchase of some or all of the bank’s deposits and assets by an acquiring bank, liquidation of the 

bank’s assets, settlement of depositor and other claims 

under applicable laws, and disposition of pending or 

outstanding litigation.

In many countries, once a decision is made to revoke a 

bank’s charter or license, the bank is placed into receivership.3

 A receiver may be appointed administratively 

1

 For a more in-depth discussion of the claims process, see “Reimbursing Depositors” and “Claims and Recoveries,” Financial Stability 

Forum (FSF) Working Group on Deposit Insurance Discussion Papers, 

September 2001. 

2

 The processes discussed in this article are generally applicable to 

most deposit insurance systems; however, specific features of the 

claims process will reflect the laws and customs of the specific 

country.

3

 In some countries, a bank’s charter or license will not be revoked 

until the affairs of the bank have been wound up, and some countries 

do not have a formal receivership process.

Feature Article:

A Guide to Processing Deposit Insurance Claims: 

A Cross-Country Perspective

Figure 1

Troubled

Bank

Supervisory

Intervention

Bank Remains

Troubled

Bank Fails;

License

Revoked

Bank Saved;

No Assistance

(Internal Clean-up)

Bank Saved;

External Merger

Bank Placed in Receivership;

Buyer Found (P&A) or

Bank Liquidated

Claims

Process

Recoveries

Process

Insured Depositors

Paid by

Deposit Insurer

(Bank Liquidation)

Insured Deposits

Acquired by

Assuming Bank

(Purchase and

Assumption)

Deposit Insurer,

Uninsured Depositors,

and Other Creditors

Paid from Receivership

Failure Resolution Process

Source: FDIC.
FDIC Quarterly 43 2010, Volume 4, No. 2

Processing Deposit Insurance Claims

consolidation or the offset of loans against deposit 

balances.) A well-designed deposit insurance system will 

provide the information that is necessary for an orderly 

and fair claims process. For example, laws in some countries require that depositors be ranked ahead of other 

claimants in the distribution of the failed bank’s assets.8

That is, depositor claims are paid first out of the funds 

recovered as the bank’s assets are liquidated. The priority for paying insured depositors must be transparent to 

instill confidence in the insurance system. As such, this 

information should be available to depositors and other 

creditors when they place their funds in the bank.

The deposit insurer also must be adequately funded to 

ensure that payments to insured depositors are made in 

a timely manner and to maintain public confidence in 

the value of the insurance guarantee. In practice, many 

deposit insurance systems have access to more than one 

source of funding. The most common source of ready 

money is a deposit insurance fund, which typically is 

built up from assessments paid by member banks and 

accumulated interest on the fund balance. The authority to borrow from the government or the private sector 

often provides a backup source of funds. Assessments 

can also be charged to the banking industry after a bank 

failure.

An efficient claims process also requires that information systems and human resources be readily available 

to the deposit insurer. Also, because communication 

among authorities involved in the claims process is 

crucial, the deposit insurer must foster strong working 

relationships with the supervisory authority, other relevant safety-net players, and the receiver to ensure the 

cooperation necessary for a timely, accurate, and efficient payout of insured depositors. The deposit insurer 

must develop detailed procedures to implement when 

an insured institution fails. These procedures must 

clearly delineate the deposit insurer’s responsibilities as 

well as a schedule for claims processing.

Finally, the deposit insurer should possess efficient 

systems for processing claimant information and making 

monetary distributions. The claims process involves 

aggregating the monies belonging to an individual 

depositor housed in separate accounts for the purpose of 

determining insured balances. Further, in some cases 

deposit insurance is provided on the basis of the different rights and capacities in which the funds are held; 

8

 For example, Title III of the Omnibus Budget Reconciliation Act of 

1993 established national depositor preference for all insured depository institutions in the United States.

from legal actions by or against the insolvent bank and 

from financial assistance provided to the bank by the 

deposit insurer or others prior to failure.

Insured depositors in many countries subrogate their 

claims against the receivership to the deposit insurer 

when a failed bank is liquidated. Accordingly, the 

deposit insurer becomes the claimant against the receivership, acting in place of the insured depositors. The 

deposit insurer reimburses depositors, up to the level 

of their insured deposits, for the funds that are covered 

by deposit insurance. In doing so, the deposit insurer 

bears the time and recovery-rate risks of the receivership process.6

In addition to insured depositor claims, the deposit 

insurer may be responsible for processing other claims—

that is, gathering information on the monies owed and 

filing the paperwork with the receiver or bankruptcy 

administrator. Any excess funds that are recovered from 

the sale of the bank’s assets are then distributed to those 

claimants, as appropriate, according to applicable laws.

The methodology used to resolve a failed bank determines the scope of the claims process. For example, in a 

purchase and assumption transaction (P&A), all deposits, secured liabilities, and good assets (typically cash 

and cash equivalents) of the failed bank are transferred 

to an acquiring bank. If the good assets are insufficient 

to cover the failed bank’s deposit liabilities, the deposit 

insurer adds enough cash or bonds to make the depositors whole. The acquiring bank may take other assets as 

well. A whole bank P&A transaction greatly reduces 

the work involved in the claims process, as it is not 

necessary to make an insurance determination.

Making the Claims Process Efficient and Effective

A number of factors contribute to efficient and effective 

claims processing. First, the scope and level of deposit 

insurance coverage must be clearly defined in law and 

well understood by the public.7 The public must be 

aware of the institutions, products, and types of accounts 

covered by deposit insurance; the amount of coverage; 

and adjustments that may be made to that coverage. 

(Coverage adjustment calculations may involve account 

6

 The rights of insured depositors to file claims against the receivership are taken on or subrogated by the deposit insurer. In other 

words, it becomes the duty of the deposit insurer—not the insured 

depositor—to file a claim against the receivership.

7

 For a discussion of the elements of a well-designed deposit insurance system, see Blair, Carns, and Kushmeider (2007); and FSF Working Group on Deposit Insurance (2001). 
FDIC Quarterly 44 2010, Volume 4, No. 2

sure planning.

9

 During the preclosure planning phase, 

the bank’s primary regulator notifies the deposit insurer 

of a possible failure and provides the insurer information about the failing bank. Deposit insurers also collect 

preliminary deposit data and information about the 

institution’s data system(s) and pre-position staff in 

preparation for the closing.

Granting the deposit insurer access to, or control of, 

deposit data before a bank is closed helps to ensure that 

legitimate claims are paid promptly and lessens the risk 

of account misrepresentation. However, advance notice 

9

 For example, in the United States, the FDIC, which insures bank and 

thrift deposits, generally is given at least 90 days’ notice before an 

insured institution is closed. If no financial institution can be found to 

assume the deposits during this period, the FDIC makes plans to pay 

depositors the full amount of their insured deposits.

that is, deposit insurance is provided to the ultimate 

beneficial owner of the account, regardless of how the 

account may be titled. These are complex processes that 

require specialized systems to ensure depositors are paid 

in a timely fashion.

The Claims Process: How Depositors Are Reimbursed

Efficient and timely claims processing requires extensive 

planning and preparation by the deposit insurer. Determining who should be reimbursed and ensuring that 

insurance limits are respected are the most crucial and 

time-consuming steps (see text box).

Legislative or other provisions in a number of countries 

allow the deposit insurer to prepare for closure at institutions that appear likely to fail—often known as precloThe Claims Process: Basic Procedures

The deposit insurer should establish the necessary systems 

to process the claims of insured depositors and, if responsible, of uninsured depositors and other claimants. If 

necessary, an appeals process should also be established.

As part of preclosure preparatory work, the deposit insurer 

should, whenever possible,

•	 Receive notification about a possible failure and

collect preliminary deposit data or receive information from the primary regulator,

•	 Gather information about the institution’s data

system(s), and

•	 Pre-position claims-processing staff.

After an insured institution is closed, the deposit insurer 

should

•	 Notify the public and depositors of reimbursement

procedures;

•	 Secure information on depositors (and on other claimants, if responsible) and determine the insurance 

status of each depositor by

– Downloading the institution’s deposit information 

into the deposit insurer’s processing systems,

– Reviewing incoming transfers and determining 

whether they arrived prior to the institution’s 

closure,

– Drawing up individual deposit statements showing 

principal and interest as of the closing date and 

then sorting them to determine ownership,

– Identifying the excluded depositors or accounts, 

verifying the rights of trustees and beneficiaries, 

and clarifying any fiduciary relationships,

– Performing the interest calculations on deposits 

according to the statutory provisions, and

– Posting account statements to the general ledger 

and balancing to ensure accuracy;

•	 Determine if any deposits are to be set off against

outstanding loans or if any deposits are used as 

collateral;

•	 Make adjustments, as appropriate, for any insured

deposits that are held in foreign currencies;

•	 Examine proof of insurance, if needed; and

•	 Keep records of all reimbursements made to depositors

for verification and auditing purposes.

Follow-up tasks may be required, such as

•	 Submitting the reimbursement process to an independent auditor,

•	 Submitting the deposit insurer’s claim as creditor of

the closed institution to the liquidator in compliance 

with the subrogation rules, and

•	 Locating depositors whose reimbursement was unsuccessful during the normal process.
FDIC Quarterly 45 2010, Volume 4, No. 2

Processing Deposit Insurance Claims

closed. The deposit insurer does this by completing the 

following activities:

•	 Downloading deposit information

– Cleansing the data and reconciling them to the 

bank’s general ledger and supporting subsidiary 

systems

– Inputting the deposit data into the insurer’s 

processing systems

•	 Identifying depositors and determining insurance 

coverage

– Preparing and sorting individual account statements showing principal and interest as of the 

closing date to determine ownership

– Grouping depositors with multiple accounts and 

preparing a combined account statement

– Sorting the combined account statement to show 

the rights and capacities allowed under deposit 

insurance laws

– Identifying excluded depositors or accounts

Any deposits that are to be offset against outstanding 

loans or that are used as collateral require special treatment according to the laws and regulations in effect. 

The deposit insurer makes appropriate adjustments for 

any insured deposits that are held in foreign currencies. 

In many cases, the deposit insurer will simply convert a 

deposit held in a foreign currency to the domestic 

currency at the appropriate exchange rate. In other 

cases, the deposit insurer may have to pay the depositor 

in the foreign currency.

The last step before reimbursement is preparing a settlements claim statement specifying the amount to be paid 

by the deposit insurer and claimed from the receivership. At this point, the deposit insurer is prepared to 

reimburse insured depositors, provided there are sufficient funds to do so. The deposit insurer can then 

require identification or other documentation, if 

needed, and issue checks or implement other means of 

payment. The insurer must keep a record of all reimbursements made to depositors for verification and 

auditing purposes.

In some instances, the deposit insurer takes certain 

follow-up steps after the reimbursement is complete. For 

example, the insurer may need to submit the reimbursein a number of countries is not possible.10 Accordingly, 

the deposit insurer cannot begin the insurance determination process until after the institution has been 

closed, delaying payment to insured depositors (and the 

bank’s other creditors). The longer the period between 

closure and the deposit insurer’s access to the institution’s records, the greater the risk that manipulation of 

the institution’s data might occur. This could result in 

the inability of the deposit insurer to sort out depositors 

with legitimate claims from those seeking protection of 

funds that were not legally insured.

Regardless of how a bank closing is handled, a deposit 

insurer needs to know when to start and when to 

complete the claims process. Likewise, depositors (and 

other claimants) need to know when and how they 

can expect to receive their funds. In many instances, 

insured depositors do not have to take any action to 

receive their reimbursement—once the bank’s records 

are processed, the insurer distributes depositor funds. 

In other cases, however, insured depositors must file a 

claim and show proof of ownership or identification 

before being reimbursed. In addition, an appeals process 

may need to be established, and the deposit insurer 

may need to process claims and payments for uninsured 

and nondepositor claimants if it is also acting as the 

receiver. To reduce the loss of public confidence in the 

insurance guarantee, depositors must be made aware of 

any actions that affect their insured deposits—such as 

the need to file a claim and how to do so—and when 

they can expect to be reimbursed.

A deposit insurer should have clearly established procedures for determining deposit and other account balances 

in the event of failure. Over the course of any business 

day, a depositor’s account balance may be affected by 

debit or credit transactions. Transparent rules should be 

in place indicating how the bank’s business on the day of 

failure will be closed out to arrive at deposit balances 

used for insurance determination purposes.

To begin reimbursing insured depositors (and if responsible, processing other claims) as soon as possible, the 

deposit insurer needs to secure depositor and other 

claimant information immediately after an institution is 

10 In many countries, the decision to close an institution rests with the 

supervisory authority, which will either suspend or withdraw the institution’s license or charter. In other countries, the process of closing 

an institution may be initiated by the supervisor or deposit insurer, but 

must be approved by a court. In still other countries, the deposit 

insurer is restricted by strict bank deposit secrecy rules from gathering information before closure. 
FDIC Quarterly 46 2010, Volume 4, No. 2

preferred resolution strategy.11 The CDIC begins to 

verify, reconcile, and settle insured deposit accounts 

immediately after a bank is closed. Deposits are paid out 

“as soon as possible,” with one to three months being 

the average period from the date of closing to payment. 

During this period, depositors can request advance 

payment(s) of their insured deposits. These requests are 

checked against the bank’s records, and the CDIC 

approves or disapproves the request.

The CDIC has developed extensive processes and procedures to verify, reconcile, and settle insured deposit 

accounts. The CDIC calculates interest and pays all 

eligible deposits up to the application date of the courtapproved winding-up order. The CDIC relies on the 

books and records of the failed member institution; 

depositors do not have to file a proof of claim. The 

CDIC obtains final data from the failed bank at the time 

of closure and reconciles the eligible deposit balance 

information from its insurance determination process to 

the bank’s sub ledgers and general ledger. Depending on 

the completeness and accuracy of the bank’s records, 

this process can be quite time-consuming.

Before making a payout, the CDIC identifies depositors 

whose payments should be withheld because of an 

offsetting loan balance or other reasons. Payments can 

be made in the form of a check or by transfer of the 

deposit to another member institution. The CDIC 

obtains an independent audit of the payout for control 

purposes and to support its proof of claim submitted to 

the liquidator of the estate.

The CDIC reviews the bank’s records to identify 

depositors with multiple accounts and combines those 

accounts to determine the total amount that will be 

paid. If the combined deposit balance exceeds the insurance limit, the CDIC confirms the depositor’s identity 

by referring to the bank’s original records. This ensures 

the appropriate aggregation of depositor accounts and 

mitigates the risk of over- or underpayment of deposit 

insurance.

Shortly after a bank is closed, the CDIC sends a letter 

to depositors outlining the process and anticipated 

timing of the reimbursement. A second letter is sent 

detailing whether deposits will be transferred to another 

institution or whether depositors will be reimbursed by 

check. Finally, a customer statement is prepared and 

mailed to all depositors when their account balances 

are reimbursed.

11 This work helps put CDIC in a payout-ready mode with the information it needs on systems and access to data.

ment process to an independent auditor, especially if the 

procedures implementing the regulations and supporting 

software were not audited before use. In some cases, the 

deposit insurer will also need to submit its claim as creditor of the closed institution to the liquidator in compliance with the subrogation rules specifying the amounts 

reimbursed and the indemnification obligation.

The Claims Process: Canada, the Philippines, 

the Russian Federation, and the United States

The steps discussed above present a general framework 

for the deposit insurance claims process. However, 

deposit insurers use a variety of tools and processes to 

reimburse insured depositors. The remainder of this article examines the claims process of four deposit insurers: 

the Canada Deposit Insurance Corporation (CDIC), 

the Philippines Deposit Insurance Corporation (PDIC), 

the Deposit Insurance Agency (DIA) of the Russian 

Federation, and the Federal Deposit Insurance Corporation (FDIC) in the United States. (Select characteristics of each country’s claims process can also be found 

in Table 1.)

Canada

The CDIC maintains a deposit insurance fund that is 

supported by premiums paid by member institutions. 

In addition, the CDIC has access to government funds 

and may borrow in the financial markets. The CDIC 

has staff dedicated to the claims process, but it sometimes calls upon external consultants to do the detailed 

accounting and information systems work related to the 

claims process.

The CDIC coordinates its activities with Canada’s bank 

supervisory agencies (the Office of the Superintendent of 

Financial Institutions (OSFI) and provincial supervisory 

agencies). The CDIC board of directors includes OSFI 

and other safety-net players (the Bank of Canada, the 

Department of Finance, and the Financial Consumer 

Agency of Canada). The Guide to Intervention for Federal 

Financial Institutions, which was jointly developed and 

published by the CDIC and the federal bank regulator, 

provides a framework for responding effectively to circumstances that could lead to the instability of a financial 

institution. Given the close working relationships between 

the CDIC and these safety-net players, the CDIC is fully 

informed of the potential for a bank’s closing.

Before a closure, the CDIC conducts special and preparatory examinations, assesses potential resolution strategies, and secures the necessary funding to undertake its 
FDIC Quarterly 47 2010, Volume 4, No. 2

Processing Deposit Insurance Claims

Table 1

Characteristics of the Deposit Insurance Claims Process

Canada Philippines Russian Federation United States

Deposit insurer Canada Deposit 

Insurance Corporation 

Philippines Deposit 

Insurance Corporation

Deposit Insurance 

Agency

Federal Deposit 

Insurance Corporation 

Year established 1967 1963 2004 1933

Mandate •	Deposit insurer •	Deposit insurer

•	Co-regulator of banks

•	Receiver and liquidator of closed banks

•	Deposit insurer

•	Liquidator of banks

that take household 

deposits 

•	Deposit insurer

•	Supervisor of statechartered banks

•	Receiver and liquidator of closed banks

Funding

•	Primary source

•	Secondary source(s)

•	Ex ante deposit insurance fund

•	Member premiums

•	Government funds

•	Borrowing authority

from markets

•	Ex ante deposit insurance fund

•	Member premiums

•	Government capital

contribution

•	Borrowing authority

from the central bank 

and certain private 

sector banks 

•	Ex ante deposit insurance fund

•	Member premiums

•	Government capital

contribution

•	Limited authority to

borrow from the 

government 

•	Ex ante deposit insurance fund

•	Member premiums

•	Line of credit with the

U.S. Treasury

•	Authority to borrow

from the Federal 

Financing Bank and 

insured institutions

Staffing External consultants 

and CDIC staff

PDIC staff DIA staff and/or 

selected agent banks

FDIC staff

Number of failed 

insured institutions 

since inception, as of 

year-end 2007 

43 473* Not available 2,237

Other features

•	Advance notice of

failure

Yes Yes No Yes

•	Advance access to

deposit records

Yes No (bank secrecy laws) Access required within 

seven days of bank 

closure, but DIA may 

have advance access in 

some cases 

Yes

•	Prompt corrective

action letter

No Yes Yes Yes 

•	Deposit insurer

named receiver of 

failed bank

No Yes Yes Yes

•	Payouts begin Within one to three 

months, on average 

Within nine days of 

bank closure

No later than 14 days 

after bank closure 

Following business day

•	Form of payouts Check or deposit 

transfer

Cash or deposit transfer Cash or deposit transfer Check or deposit 

transfer 

•	Claim by depositors

required 

No Yes, identification 

required 

Yes, application and 

identification required 

No 

•	Depositor notification By letter Register of Estimated 

Insured Deposits, 

national and local media 

announcements 

By letter, local newspapers, and Bank of 

Russia Bulletin 

By letter 

* Number of banks closed from 1970 to 1997. 

Source: FDIC.
FDIC Quarterly 48 2010, Volume 4, No. 2

The PDIC pays insured deposits after the validity of the 

claim is established. A claim is normally processed and 

paid on the same day it is filed, except in cases where 

the bank’s records are inaccurate or inadequate, or the 

claimant is unable to provide the required 

documentation.

The PDIC completes initial servicing or payout of 

claims at the bank within two to three weeks after the 

closing/takeover. Thereafter, acceptance and servicing 

of claims is continued at the PDIC office. Depositors 

have two years from the bank closing date to file their 

claims.

The Russian Federation

In the Russian Federation, the DIA is funded by capital 

contributed by the government and by assessments paid 

by member institutions. The DIA may conduct the 

payout process using its own dedicated staff or may use 

an agent bank selected on a competitive basis. The DIA 

has preestablished agreements with banks that are 

accredited to conduct the payout process.

Banking licenses are granted and revoked by the 

Central Bank of Russia (CBR), which regulates and 

supervises banks. Banks are declared insolvent by a 

bankruptcy court (the arbitration court), which also 

appoints a receiver for the failed bank. The DIA is 

named receiver when banks that accept household 

deposits fail.

The CBR is not required to notify the DIA of a potential bank closure; however, the DIA is informed when 

prompt corrective action measures are taken against an 

institution. Once the CBR revokes the bank’s license, 

the DIA must be notified no later than the following 

business day. Often this means that the DIA receives 

official information about a bank’s closure at the same 

time as the public. However, upon mutual agreement 

with the CBR, DIA staff may be included in the temporary administration of the bank preclosure and thus gain 

quicker access to the information.

By law, within seven days from the bank’s closure, the 

DIA must receive a register of the bank’s depositors that 

lists the deposits and other liabilities of the bank. Once 

the DIA receives this information, it sends letters to all 

eligible depositors describing the procedure for filing 

claims and the location, timing, and form of reimbursement. The DIA also publishes information on the 

payout process in local newspapers and the Bank of 

Russia Bulletin.

The Philippines

The PDIC maintains a deposit insurance fund that is 

supported by premium assessments paid by member 

banks. Funding is also provided by the Philippine 

government through paid-in capital. The PDIC is 

authorized to borrow from the Philippine central bank 

and, if necessary, from certain private sector banks. 

With the approval of the country’s president, the PDIC 

may issue bonds or other obligations to pay insured 

depositor claims.

A distressed bank may request financial assistance from 

the PDIC. If the bank meets certain conditions—for 

example, if the continued operation of the bank is 

needed to provide adequate banking service in the 

community or to maintain financial stability in the 

economy—the PDIC may provide assistance. When 

rehabilitation is unlikely to resolve the bank’s problems, 

however, the Monetary Board of the central bank may 

order the bank closed. The PDIC automatically 

becomes the receiver and begins the payout process. 

Because a bank deposit secrecy law is in effect, the 

PDIC can obtain deposit records only upon closure or 

takeover of the bank, in which case the PDIC is notified and immediately takes charge of the bank’s assets 

and liabilities.

The PDIC’s Claims Processing Department handles 

claims for payment of insured deposits. Staff in this 

department checks for compliance with documentary 

requirements, validates supporting documents, and 

approves or denies claims. This department also determines the funding requirements for a payout and settles 

claims by either check or cash. 

The PDIC follows a self-imposed deadline of making 

payouts within nine days of a bank takeover. Before 

making payouts, the PDIC conducts a presettlement 

examination in which outstanding and insured deposits 

are identified by bank documents and records. Next, 

the PDIC establishes the validity of deposit accounts 

and tracks the inflow of funds. Then, it generates a 

Register of Estimated Insured Deposits, which becomes 

the basis for the claims process to begin. Depositors file 

a claim, and a claims agent verifies that they are the 

rightful owners by requiring basic documents, such as a 

passbook or bank statement and valid customer identification, according to established guidelines.12

12 Valid identification includes affidavits of ownership of accounts and 

birth certificates, among others.
FDIC Quarterly 49 2010, Volume 4, No. 2

Processing Deposit Insurance Claims

FDIC reviews the institution’s financial and operational 

information to determine the number of staff likely to 

be needed. A claims agent is appointed to lead the 

claims process. Before the closing, FDIC staff learns as 

much as possible about the failing bank by reviewing 

bank deposit records and making preliminary insurance 

determinations.

On the day of the closing, claims staff assembles to 

make final payout determinations. If all of the deposits 

in the failed bank are not sold to an acquiring institution, staff conducts an insurance determination to identify which deposits are fully insured.

During a typical bank closing, the FDIC takes possession of the premises and records of the bank and then 

determines the insured status of deposits. Since the 

FDIC is also the receiver of the bank, it processes the 

claims of uninsured depositors and other claimants. The 

payment to insured depositors and the processing of 

claims that exceed the insurance limit begin the next 

business day after closure. In general, most banks are 

closed on a Friday, and depositors have access to their 

insured deposits on Monday.

Over the closing weekend, the final insurance determination must be made. Staff locates and aggregates 

deposit accounts that are related by name, address, or 

tax identification number. Then, ownership rights and 

capacities are determined and the insurance limit 

applied. A combined account statement for depositors 

with multiple accounts is prepared.

In a payout, deposit amounts identified as fully insured 

are either passed to an agent bank in an insured deposit 

transfer or paid to depositors in the form of a check 

mailed to the depositor’s address of record. If an 

account appears to exceed the coverage limit or if other 

questions exist, the FDIC contacts depositors directly; 

additional information may be required before the full 

claim is paid. The FDIC relies primarily on the records 

of the bank to determine the status of depositor claims. 

Insurance payments are available to depositors for 

18 months, after which time all remaining unclaimed 

funds are escheated with the appropriate state. The 

state can attempt to locate the depositors for ten years 

before the funds revert to the FDIC.

As receiver of the failed bank, the FDIC is also responsible for notifying general creditors of the bank’s failure 

and paying their claims to the extent that funds remain 

after depositors are paid. The FDIC follows a standardPayouts are required by law to start no later than 14 

days from the date a bank is closed. Payment calculations are made on the basis of the register of depositors. 

Adjustments are made if a depositor has borrowed funds 

from the bank. In such cases, the amount borrowed is 

deducted (set off) from the aggregate of all deposits. 

If aggregate deposits exceed the coverage limit but the 

deduction for borrowings brings the sum below the 

insurance limit, the full amount of the net deposits 

is paid.

Depositors can file their claims immediately after the 

bank is closed. To receive payment, a depositor must 

submit a claims application and identity documents. 

Once the paperwork is submitted, the DIA has three 

days to make the payout. Payments can be by cash or 

funds transferred to an account specified by the depositor. The depositor also receives a reference document 

with information about the accounts that were paid.

Eligible deposits made in a foreign currency are covered, 

but the reimbursement is made in rubles. To calculate 

the amount of the deposit, the DIA uses the exchange 

rate set by the CBR as of the day the bank fails. A 

depositor who files a claim that exceeds the coverage 

limit is paid an amount equal to the coverage limit. 

The remaining claim is recorded in a claims register, 

which is used to track deposits and other claims that 

are not covered by deposit insurance. These claims are 

paid from the proceeds of the receivership on a pro rata 

basis. Household depositors and the DIA (as the holder 

of subrogated claims) have first priority on the assets of 

the receivership.13 The claims register closes out no 

earlier than 60 days after a failed bank’s receiver 

publishes information on the court decision declaring a 

bank insolvent.

The United States

The FDIC’s primary source of funding comes from 

premiums paid by member banks to a deposit insurance 

fund. Additional funding is available through a line of 

credit with the U.S. Department of the Treasury. The 

FDIC also has the authority to borrow from the Federal 

Financing Bank and insured depository institutions.

The FDIC’s Division of Resolutions and Receiverships 

performs both the claims and receivership functions 

when a bank fails. To prepare for a bank closing, the 

13 According to the Russian Deposit Insurance Law, insured deposits 

are paid from the DIA’s own resources. All other creditors are paid 

from the bankruptcy estate according to the established priority of 

claims on a pro rata basis. 
FDIC Quarterly 50 2010, Volume 4, No. 2

Bibliography

Blair, Christine E., Frederick Carns, and Rose M. 

Kushmeider. “Instituting a Deposit Insurance System: 

Why? How?” In Deposit Insurance, eds. Andrew 

Campbell, John Raymond LaBrosse, David G. Mayes, 

and Dalvinder Singh. Basingstoke, U.K.: Palgrave 

Macmillan, 2007.

Canada Deposit Insurance Corporation. 2007 Annual 

Report. http://www.cdic.ca/multimedia/Website/

Documents/ar/en/CDIC_AR07E.pdf. 2007.

Deposit Insurance Agency. Report of the Deposit Insurance Agency State Corporation for 2006. http://www.asv.

org.ru/agency/annual/2006/eng/index.html. 2006.

European Parliament and the Council of the European 

Union. Directive 94/19/EC on Deposit-Guarantee 

Schemes. Brussels: European Union, 1994.

Federal Deposit Insurance Corporation (FDIC). Annual 

Report. Washington, DC: FDIC, 1935.

FDIC. Managing the Crisis: The FDIC and RTC Experience, 1980–1994. Washington, DC: FDIC, 1998.

FDIC. Resolutions Handbook: Methods for Resolving 

Troubled Financial Institutions in the United States. 

Washington, DC: FDIC, 1998.

Financial Stability Forum (FSF). Guidance for Developing Effective Deposit Insurance Systems. Basel, Switzerland: FSF, 2001.

FSF Working Group on Deposit Insurance. “Guidance 

for Developing Effective Deposit Insurance Systems.” 

Discussion paper. http://www.fdic.gov/deposit/deposits/

international/guidance/guidance/index.html#discussion. 

2001.

Mason, Joseph, Ali Anari, and James Kolari. “Bank 

Asset Liquidation and the Propagation of the U.S. 

Great Depression.” Paper presented at the Bank Structure and Competition Conference, Federal Reserve 

Bank of Chicago. 2000.

Philippine Deposit Insurance Corporation. Annual 

Report 2006. http://www.pdic.gov.ph/index.php?nid1=0. 

2006.

ized receivership claims process, which requires that 

a notice be placed in a local newspaper for three 

consecutive months and an individual notice be mailed 

to creditors on the books and records of the failed bank. 

Creditors may file a claim within the time frame 

provided in the notice—usually 90 days from the date 

of the notice. A determination regarding the validity of 

the claim is made, and if sufficient funds are recovered, 

the general creditors are reimbursed in whole or in part 

by the FDIC. If no funds are available for immediate 

distribution, the claimant gets a receivership certificate 

showing entitlement to a share in the receivership 

estate.

Staff also identifies depositors with delinquent loans. 

The FDIC may have the right to set off the accounts of 

these depositors. In addition, customers who have uninsured deposits may apply to have their loan balances 

reduced by the amount of their uninsured deposits.

Conclusion

The capacity to manage the claims process for a failed 

bank efficiently is an essential function of an effective 

deposit insurance system. It involves satisfying insured 

depositors and often liability holders who have bona 

fide claims against the bank.

The primary purpose of a deposit insurance system is to 

protect the interests of insured depositors in the event 

of a bank failure. Despite international differences in 

the deposit insurance claims process, most nations share 

a core set of processes for managing claims. A successful 

claims process ultimately depends on having the necessary resources and developing consistent strategies 

within the country. 

Authors: Christine E. Blair, Senior Economist

Division of Insurance and Research

Rose M. Kushmeider, Senior Economist

Division of Insurance and Research

The authors wish to thank Paul Kupiec and Jack Reidhill of 

the FDIC’s Division of Insurance and Research and James 

Marino of the FDIC’s Division of Resolutions and Receiverships for their advice and comments. They also thank the 

deposit insurance agencies in Canada, the Philippines, and 

the Russian Federation for supplying data and descriptions 

of their systems.