§3903 Purchasing Groups

Summary

Purchasing groups are protected from many state rules that would stop them from forming, stop insurers from giving them group rates or coverages, or otherwise treat them unfairly. The law blocks eight kinds of state limits, such as bans on groups, rules that stop insurers from offering group advantages, bans on buying group coverage, rules that require groups or members to exist for a minimum time, limits on group size or ownership, rules forcing a certain percentage of members to join, requirements that policies be countersigned by an in‑state agent, and other discrimination. These protections apply to liability insurance for the group and its members and to liability coverage, insurance services, and management services. States may still require agents or brokers who sell to purchasing groups to be licensed, but they cannot treat nonresident agents worse. A purchasing group must tell each State’s insurance commissioner before doing business there. The group must give its home State, the kinds of liability insurance it will buy, the insurer and insurer’s home State, and its main office, and must report changes. The group must usually register and name the State commissioner to accept legal papers, but some older groups are exempt if they meet specific date-based conditions (including April 1, 1986; September 25, 1981; and October 27, 1986). States keep power to enforce laws where these protections do not apply and may sue in State or Federal court.