Securities issued by the self-insurer or its subsidiaries, or its affiliate companies or parent companies, shall not be included in the security deposit except for particular self-insured deposits.

• A. Shall not be
• B. Are included
• C. Are excluded
• D. Must be

Answer: (A)

The key idea is that a security deposit is meant to guarantee payment of claims with assets that are readily available and independent from the insurer’s own financial health. Securities issued by the self-insurer or its subsidiaries or affiliates are tied to the issuer’s fortunes, so including them could jeopardize liquidity or create conflicts of interest if the insurer’s financial situation worsens. For that reason, they are not counted as part of the security deposit, with only very narrow, defined exceptions for particular self-insured deposits. In short, these self-issued securities are generally excluded from the deposit to protect claim payments and ensure reliable, accessible collateral.