Fictitious Group
What Does Fictitious Group Mean?
In the insurance industry, a fictitious group refers to a fraudulent or non-existent group created for the purpose of purchasing insurance. Acquiring insurance as a fictitious group is illegal and deemed an unfair and prohibited practice. However, the federal government provides an exemption for risk-purchasing groups in this context.
Insuranceopedia Explains Fictitious Group
By enacting the Liability Retention Act of 1981, amended in 1986, the federal government has facilitated the process for risk purchasing groups to obtain liability insurance by eliminating barriers imposed by state laws, including restrictions against purchases by fictitious groups.
However, any group seeking to purchase insurance must still provide proof of its legitimacy before acquiring liability policies. This includes establishing the identities of its members and demonstrating that they practice a similar trade or profession.
