In law and concept that is true, but I believe that they have the power to waive the cap and often do in practice.
For your “often” do you have an example? The only time I can think of anything like that was the First Republic fiasco where the then FDIC Chairman let his mouth get ahead of his brain. Or are you thinking about when they went from $100,000 to $250,000 on a temporary basis (later made permanent).