In order to develop a high current density in coils, Bi-2212 wires must be electrically discrete in tight winding packs. It is vital to use an insulating layer that is thin, fulfils the dielectric requirements, and can survive the heat treatment whose maximum temperature reaches 890 °C. A thin (20-30 µm) ceramic coating could be better as the insulating layer compared to alumino-silicate braided fiber insulation, which is about 100 μm thick and reacts with the Ag sheath during heat treatment, degrading the critical current density (Jc). At present, TiO2 seems to be the most viable ceramic material for such a thin insulation because it is chemically compatible with Ag and Bi-2212 and its sintering temperature is lower than the maximum temperature used for the Bi-2212 heat treatment. However, recent tests of a large Bi-2212 coil insulated only with TiO2 showed severe electrical shorting between the wires after over pressure heat treatment (OPHT). The origin of the shorting was frequent silver extrusions that penetrated the porous TiO2 layer and electrically connected adjacent Bi-2212 wires. To understand the mechanism of this unexpected behaviour, we investigated the effect of sheath material and hydrostatic pressure on the formation of Ag extrusions. We found that Ag extrusions occur only when TiO2-insulated Ag-0.2%Mg sheathed wire (Ag(Mg) wire) undergoes OPHT at 50 bar. No Ag extrusions were observed when the TiO2-insulated Ag(Mg) wire was processed at 1 bar. The TiO2-insulated wires sheathed with pure Ag that underwent 50 bar OPHT were also free from Ag extrusions. A key finding is that the Ag extrusions emanating from the Ag(Mg) sheath actually contain no MgO, suggesting that local depletion of MgO facilitates local, heterogeneous deformation of the sheath under hydrostatic overpressure. Our study also suggests that predensifying the Ag(Mg) wire before insulating it with TiO2 and doing the final OPHT can potentially prevent Ag extrusion.