§3903 Purchasing Groups

Summary

Purchasing groups can ignore state rules that would stop them from forming or from getting special group insurance deals. States cannot bar groups from buying insurance as a group, block insurers from offering group rates or different policy terms because of group loss experience, make groups wait a minimum time to form or for members to join, demand a minimum number of members, require common ownership or a certain legal form, force a certain percent of members to buy group coverage, require a local agent to sign every policy, or otherwise treat groups unfairly. These protections cover liability insurance and related insurance or management services. States may still require any agent or broker who works for a purchasing group to have a state license, but they cannot impose rules that treat out-of-state agents worse. A purchasing group must tell each State insurance commissioner where it is based, what liability lines it will buy, which insurer it will use and that insurer’s home state, and the group’s main business address, and must update that information if it changes. The group must name the State insurance commissioner to accept legal papers, with narrow exceptions for groups with certain earlier dates of being based or buying insurance (April 1, 1986; October 27, 1986; September 25, 1981). If a group wants insurance from an insurer not admitted in its State or from a risk retention group not chartered in its State, it must buy that insurance through a licensed surplus-lines broker. States keep their power to enforce laws that still apply and to sue in court.