Fictitious Group

Published: | Updated: December 22, 2017

Definition - What does Fictitious Group mean?

A fictitious group, in the context of the insurance industry, is a bogus or fake group made up in order to buy insurance. Buying insurance as a fictitious group is illegal and considered an unfair and prohibited practice. The federal government preempts this law for risk purchasing groups.

Insuranceopedia explains Fictitious Group

By passing The Liability Retention Act of 1981 (amended in 1986), the federal government has made it easier for risk purchasing groups to buy liability insurance by removing barriers imposed by state laws, such as those barring purchases by fictitious groups.

Nonetheless, any group purchasing insurance must still submit proof of its legitimacy before it can acquire liability policies. They are to establish, for instance, the identity of the members and that they practice a similar trade or profession.

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