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What is Purchasing Group?

What is the definition of Purchasing Group? What does it mean to insurance companies and clients?

asked Feb 14 '12 at 22:15

kyoko's gravatar image


A Purchasing Group refers to an entity that purchases a huge chunk of insurance for a similar risk. It then offers this insurance to companies or businesses that will need coverage for the risk. It can also be that companies or parties that have similar exposure to a risk would band together and incorporate themselves into a group to buy the insurance. They do this so that they can buy it on a group basis and thus benefit from discounts offered to a group. An example would be a trade association.

The Federal Liability Risk Retention Act of 1986 authorized the formation of such purchasing groups. There are no specific legal requirements pertaining to the formation of purchasing group as well as its legal structure.

Please take note that the purchasing group is not an insurance company.

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answered Feb 14 '12 at 22:15

masachano's gravatar image


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asked Feb 14 '12 at 22:15

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