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Purchasing Groups and Risk Retention Groups - Frequently Asked Questions
Purchasing Group FAQs > Risk Retention FAQs
Purchasing Group FAQs


What is a Purchasing Group?
A purchasing group is not an insurance company. Rather, a purchasing group can be any group of persons with similar or related liability risks who form an organization, whose purpose is to purchase commercial liability insurance on a group basis. No specific requirements are imposed regarding the legal structure of a purchasing group. In the case of a trade association, a simple resolution of the board authorizing the organization's officers to make arrangement to purchase commercial liability insurance on a group basis would be sufficient to establish the purchasing group.

Members of a purchasing group must be in similar or related businesses which exposes them to similar or related liability risks.

What are New Jersey's requirements to form a purchasing group?
There are no specific legal requirements regarding the legal structure of a purchasing group. A purchasing group can be any group of insurance buyers who come together for the purpose of purchasing liability insurance on a group basis. Many purchasing groups form as a non-profit corporation.


What must be submitted to become registered in New Jersey?
After the purchasing group is formed, N.J.A.C 11:2-36 et seq. requires that any purchasing group with members located in this state to submit to the following to the Department:

    • A letter of intent to do business in the State of New Jersey;
    • A completed registration application (PDF) and a Notice of Appointment (PDF), which designate the Commissioner as its agent for the purpose of receiving service of legal process;
    • A non-refundable filing fee, payable to the Treasurer, State of New Jersey, in the amount of $100.00;
    • A listing of current members or potential members;
    • The policy forms and promotional material the purchasing group will be using;
    • A certification letter (PDF);
    • A listing of the individual(s) who organized the purchasing group and the individuals who are providing administrative services.

Where should this information be sent?
Attention: Surplus Lines Examining Office, Division of Financial Examinations, Department of Banking and Insurance, P. O. Box 325, Trenton, NJ 08625-0325.


What are the regulations and statutes that govern purchasing groups?

    • N.J.A.C 11:2-36 et seq.
    • N.J.S.A. 17:47A-1 et seq.
    • 15 USC 3901 et seq.
 
Risk Retention Group FAQs

What is a risk retention group?
A risk retention group is any corporation or other limited liability association, which is organized for the primary purpose of and whose primary activity consists of assuming and spreading all or any portion of commercial liability exposure of its members; which is chartered and licensed as a liability insurance company and is authorized to engage in the business of insurance under the laws of any state, or prior to January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands.

Who can form a risk retention group?
The owners of a risk retention group must also be its insureds. Membership is limited to persons engaged in similar businesses or activities with respect to the liability to which they are exposed.


What are the registration requirements of risk retention groups?

    • A letter of intent to do business in the State of New Jersey;
    • A copy of its certificate of authority or license authorizing it to transact business as an insurance company, certified by the state of domicile;
    • A statement identifying the state(s) in which the risk retention group is chartered and licensed as a liability insurance company;
    • The identity of those who organized the group or who will provide administrative services;
    • The amount and nature of initial capitalization
    • The coverages to be afforded
    • The states in which the group intends to operate
    • A copy of its plan of operation or a feasibility study;
    • A completed registration application (PDF) and a notice of appointment (PDF), which designates the Commissioner as its agent for the purpose of receiving service of legal process;
    • A non-refundable filing fee, payable to the Treasurer, State of New Jersey, in the amount of $100.00;
    • The group's most recent audited financial statement;
    • The group's most recent annual statement.

Where should this information be sent?
Attention: Surplus Lines Examining Office, Division of Financial Examinations, Department of Banking and Insurance, P.O. Box 325, Trenton, NJ 08625-0325.


What are the regulations and statutes that govern risk retention groups?

    • N.J.A.C 11:2-36 et seq.
    • N.J.S.A. 17:47A-1 et seq.
    • 15 USC 3901 et seq.

Does New Jersey accept NAIC registration forms for PGs and RRGs?
No, we accept New Jersey registration forms only.

Are rates and forms required to be submitted for prior approval?
Yes, rates and forms are required to be filed, if they are not otherwise deregulated.

Are purchasing groups allowed to use non-admitted insurers?
Yes, but they have to be on the eligible surplus lines list.

Any additional questions?
Please call (609) 292-5350 extension 50079 to obtain assistance for specific issues not otherwise covered.
 
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