Which subject are you talking about? There are two subject-verb pairs: "there are provisions" and "tiny islets can be."
Ambiguity. :)
Also, in general, we need to meet two criterion: structure and logic. It is true that we typically expect a subject pronoun of a subordinate clause to refer to the subject of the main clause - that's the structural expectation - but I also have to pay attention to logic. If there's a noun that makes sense logically and a different noun that meets the structural expectation, that's also ambiguous.
Finally, sometimes they will say that's something's ambiguous (and therefore eliminate in one problem) and sometimes they will say something's right when it seems to be ambiguous in the same way that it was ambiguous (and wrong) in some other problem. Annoying - they're not even 100% consistent in their own stuff.
So don't drive yourself crazy. In general, if you've got a split between a pronoun and the actual noun (that is, the answer choice removes the pronoun and puts the real noun in its place), and you think there's ambiguity, fine - choose one of the answers with the real noun instead of the pronoun.
But if the answer choices don't offer you the option of replacing the pronoun with a real noun, then don't agonize over ambiguity of a pronoun. Go deal with everything else that you know and, if necessary, make a guess.
Finally, no, it is not true that the pronoun and the noun have to be in the same case. They can be in different cases. So not a good rule to use. :)