New Jersey Revised Statutes § 17:47a-7 - Formation Of Purchasing Group

17:47A-7. Formation of purchasing group
7. a. Only a group of persons with similar exposure to risk may form a purchasing group for the purpose of purchasing liability insurance. A purchasing group and its insurer or insurers shall be subject to all applicable laws of this State, except that a purchasing group and its insurer or insurers shall be exempt, in regard to liability insurance for the purchasing group, from any law that 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 a 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 have a minimum number of members, common ownership or affiliation, or certain legal forms;

(6) Require that a certain percentage of a purchasing group obtain insurance on a group basis;

(7) Otherwise discriminate against a purchasing group or any of its members; or

(8) Require that any insurance policy issued to a purchasing group or to any of its members be countersigned by an insurance producer residing in this State.

b. Each purchasing group with members located in this State shall, before doing business in this State, register with the commissioner, on a form prescribed by the commissioner, which form shall:

(1) Identify the state in which the group is domiciled;



(2) Identify all other states in which the group intends to do business;



(3) Specify the lines and classifications of liability insurance which the purchasing group intends to purchase;

(4) Identify the insurer or insurers from which the group intends to purchase its insurance and the domicile of that insurer;

(5) Specify the method by which, and the person or persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this State;

(6) Identify the principal place of business of the group; and



(7) Provide any other information as may be required by the commissioner to verify that the purchasing group is qualified according to the definition of "purchasing group" under section 2 of this act.

A purchasing group shall, within 10 days, notify the commissioner of any changes in any of the items set forth in this subsection.

c. The application for registration shall be accompanied by a registration fee in an amount established by the commissioner.

d. Each purchasing group registered pursuant to this section shall submit to the commissioner from time to time, as he may require, reports relative to the group's operations, including, but not limited to, information required by the commissioner to:

(1) verify that the entity qualifies as a purchasing group;



(2) determine where the purchasing group is located; and



(3) determine the appropriate tax treatment.



e. Each purchasing group registered pursuant to this section shall be subject to audits or examinations as the commissioner may deem necessary.

f. No purchasing group with members located in this State shall solicit business in this State, nor shall any person solicit, negotiate or effect a contract of insurance or accept any fee or commission on a risk located in this State which is to be effected through a purchasing group unless the purchasing group is notified by the commissioner that it is registered pursuant to the provisions of this section.

g. Each purchasing group with members located in this State shall file a statement with the commissioner which designates the commissioner as agent of the purchasing group for service of legal documents or service of process, except that this shall not apply in the case of any purchasing group which only purchases insurance that was authorized under the federal "Product Liability Risk Retention Act of 1981," Pub.L.97-45 (15 U.S.C. s.3901 et seq.), which:

(1) Was domiciled prior to April 1, 1986 and is domiciled on or after October 27, 1986 in any state of the United States;

(2) Prior to October 27, 1986, purchased insurance from an insurance carrier licensed in any state and since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state; or

(3) Was a purchasing group pursuant to the provisions of the "Product Liability Risk Retention Act of 1981," Pub.L.97-45 (15 U.S.C. s.3901 et seq.), before October 27, 1986.

h. Any purchasing group which was doing business in this State prior to the enactment of this act shall, within 90 days after the effective date of this act, register with the commissioner pursuant to the provisions of subsection b. of this section and comply with the requirements of subsection g. of this section.

L.1993,c.240,s.7.


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Last modified: October 11, 2016