If a self-insured purchases an aggregate excess policy, shall they receive any credit toward the security deposit?

If a self-insured purchases an aggregate excess policy, shall they receive any credit toward the security deposit?

• A. Yes
• B. No
• C. Only partial credit
• D. Credit applies to all deposits

Answer: (B)

When a self-insured plan posts a security deposit, that deposit functions as collateral to guarantee the plan’s ability to pay benefits. An aggregate excess policy sits above the self-insured retention and provides coverage only after the plan’s own exposure is exhausted. Since the deposit is intended to secure the core, non-reinsured obligations, the existence of an aggregate excess policy does not reduce the amount the plan must deposit. The state requires the deposit to cover the plan’s base exposure, regardless of private insurance above that layer. Therefore, no credit toward the security deposit is allowed.

When a self-insured plan posts a security deposit, that deposit functions as collateral to guarantee the plan’s ability to pay benefits. An aggregate excess policy sits above the self-insured retention and provides coverage only after the plan’s own exposure is exhausted. Since the deposit is intended to secure the core, non-reinsured obligations, the existence of an aggregate excess policy does not reduce the amount the plan must deposit. The state requires the deposit to cover the plan’s base exposure, regardless of private insurance above that layer. Therefore, no credit toward the security deposit is allowed.