15 U.S.C. § 3903 — Purchasing groups

submitted 45 years ago by Pub. L. 97-45 to r/title-15-COMMERCE-AND-TRADE · 804 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section exempts purchasing groups from specified State restrictions and preserves listed State powers.

(a) Except for this section and section 3905, a purchasing group is exempt from State laws or orders that would (1) ban its creation; (2) make it unlawful for an insurer to offer group insurance advantages based on the group’s loss and expense experience; (3) ban group purchasing; (4) require a minimum group or membership age; (5) require a minimum membership, common ownership, affiliation, or legal form; (6) require a percentage of members to buy group insurance; (7) require a resident agent or broker to countersign; or (8) otherwise discriminate. (b) The exemptions cover liability insurance for the group or members and liability coverage, insurance-related, and management services. (c) A State may license group agents or brokers but may not discriminate against nonresidents. (d) A group intending to do business in a State must notify its insurance commissioner of its domicile, intended liability lines and classifications, intended insurer and its domicile, and principal business place, and must report later changes. (e) It must register each business-State commissioner as service agent for legal documents, except for the four listed grandfathering situations involving domicile, prior licensed-carrier purchases, pre-October 27, 1986 status, and no newly unauthorized insurance. (f) It may buy from an unchartered risk-retention group or nonadmitted insurer only through a licensed agent or broker under surplus-lines law. (g) States retain enforcement powers for laws from which the group is not exempt. (h) States may sue in Federal or State court.

the actual law source: uscode.house.gov ↗public domain

(a) Exemptions from State laws, rules, regulations, or orders

Except as provided in this section and section 3905 of this title, a purchasing group is exempt from any State law, rule, regulation, or order to the extent that such law, rule, regulation, or order would—

(1)

prohibit the establishment of a purchasing group;

(2)

make it unlawful for an insurer to provide or offer to provide insurance on a basis providing, to a purchasing group or its members, advantages, based on their loss and expense experience, not afforded to other persons with respect to rates, policy forms, coverages, or other matters;

(3)

prohibit a purchasing group or its members from purchasing insurance on the group basis described in paragraph (2) of this subsection;

(4)

prohibit a purchasing group from obtaining insurance on a group basis because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time;

(5)

require that a purchasing group must have a minimum number of members, common ownership or affiliation, or a certain legal form;

(6)

require that a certain percentage of a purchasing group must obtain insurance on a group basis;

(7)

require that any insurance policy issued to a purchasing group or any members of the group be countersigned by an insurance agent or broker residing in that State; or

(8)

otherwise discriminate against a purchasing group or any of its members.

(b) Scope of exemptions

The exemptions specified in subsection (a) apply to—

(1)

liability insurance provided to—

(A)

a purchasing group; or

(B)

any person who is a member of a purchasing group; and

(2)

the provision of—

(A)

liability coverage;

(B)

insurance related services; or

(C)

management services;

to a purchasing group or member of the group.

A State may require that a person acting, or offering to act, as an agent or broker for a purchasing group obtain a license from that State, except that a State may not impose any qualification or requirement which discriminates against a nonresident agent or broker.

(d) Notice to State insurance commissioners of intent to do business

(1)

A purchasing group which intends to do business in any State shall furnish notice of such intention to the insurance commissioner of such State. Such notice—

(A)

shall identify the State in which such group is domiciled;

(B)

shall specify the lines and classifications of liability insurance which the purchasing group intends to purchase;

(C)

shall identify the insurance company from which the group intends to purchase insurance and the domicile of such company; and

(D)

shall identify the principal place of business of the group.

(2)

Such purchasing group shall notify the commissioner of any such State as to any subsequent changes in any of the items provided in such notice.

(e) Designation of agent for service of documents and process

A purchasing group shall register with and designate the State insurance commissioner of each State in which it does business as its agent solely for the purpose of receiving service of legal documents or process, except that such requirement shall not apply in the case of a purchasing group—

(1)

which—

(A)

was domiciled before April 1, 1986; and

(B)

is domiciled on and after October 27, 1986; 1

in any State of the United States;

(2)

which—

(A)

before September 25, 1981, purchased insurance from an insurance carrier licensed in any State; and

(B)

since September 25, 1981, purchases its insurance from an insurance carrier licensed in any State;

(3)

which was a purchasing group under the requirements of this chapter before October 27, 1986; and

(4)

as long as such group does not purchase insurance that was not authorized for purposes of an exemption under this chapter as in effect before October 27, 1986.

(f) Purchases of insurance through licensed agents or brokers acting pursuant to surplus lines laws

A purchasing group may not purchase insurance from a risk retention group that is not chartered in a State or from an insurer not admitted in the State in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of such State.

(g) State powers to enforce State laws

Nothing in this chapter shall be construed to affect the authority of any State to make use of any of its powers to enforce the laws of such State with respect to which a purchasing group is not exempt under this chapter.

(h) States’ authority to sue

Nothing in this chapter shall affect the authority of any State to bring an action in any Federal or State court.

Source credit: (Pub. L. 97–45, § 4, Sept. 25, 1981, 95 Stat. 951; Pub. L. 99–563, §§ 6, 8(b), 12(d), Oct. 27, 1986, 100 Stat. 3174, 3175, 3178.)

history & why it existsrecord from the source credit

1981Enacted · Pub. L. 97-45 · 95 Stat. 951
1986Amended · Pub. L. 99-563 · 100 Stat. 3174, 3175, 3178

A history note hasn’t been published yet. The record shows enactment by Pub. L. 97-45 on 1981-09-25.

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