The third important source of funding of deposit insurance systems is recoveries from the assets of the failed banks. Principle 18 of the Core Principles for Effective Deposit Insurance Systems prescribes that the deposit insurer should share in the proceeds of recoveries from the estate of a failed bank.
In some jurisdictions, deposit insurers have priority in the recovery over other unsecured creditors including larger depositors. In most countries the claims are subrogated to all depositors. In cases where the deposit insurer steps in with sizeable liquidity, there could be case for priority in recovery and in India we have taken this view where the State law accorded priority to other claims.