§3903 Purchasing groups

Summary

Allows groups that buy liability insurance together to ignore state rules that would stop them or treat them unfairly. States may not block a group from forming, stop insurers from giving group rates or coverages based on the group’s loss experience, forbid members from buying group insurance, require a minimum lifetime or membership time, force a minimum number of members, demand common ownership or a special legal form, force most members to participate, require in‑state countersignatures, or otherwise discriminate. These exemptions cover liability insurance and related coverage, insurance services, and management services. States can still require brokers to be licensed, but they cannot treat out‑of‑state brokers worse. A group must tell each State’s insurance commissioner before doing business and must give its home State, the kinds of liability lines it will buy, the insurer and that insurer’s home State, and the group’s main business address, and must report changes. A group must also register with each State’s commissioner to accept legal papers, though some older groups are exempt if they met certain date‑based rules (examples include groups domiciled before April 1, 1986 and still domiciled on or after October 27, 1986; groups buying from licensed carriers before September 25, 1981 and since then; or groups that were purchasing groups before October 27, 1986), and so long as they do not buy insurance that was not allowed under the rules before October 27, 1986. A group may not buy from a risk retention group not chartered in a State or from an insurer not admitted in the group’s State unless a licensed surplus‑lines broker is used. States keep their power to enforce laws where no exemption applies and to sue in State or Federal court.