SIGs Using New Mechanism to Cover Security Deposits

By Greg Jones, Western Bureau ChiefFive self-insured groups in California have posted letters of credit obtained through an alternative mechanism created by a global risk and insurance firm designed to free up operating cash that would otherwise be frozen as a security deposit.Self-insured employers and employers who form groups to self-insure are required to post with the state a security deposit in the form of cash, securities, surety bonds or letters of credit to ensure there is sufficient money to cover claim costs if the employer or group becomes insolvent.In 2003, Marsh & McLennan Co...