Colorado Statutes, Rules, & Regulations Common to All Lines

For how many years must a producer keep supporting documentation of his/her continuing education completion?

5 years following license completion

An insurer may NOT cancel or increase premium of a policy on a motor vehicle used by any resident of the household solely because of convictions for traffic violations that result in fewer than...?

7 points

How often must the Commissioner examine all insurers to guard against insurance company insolvency?

At least once every 5 years

An insurer cannot transact insurance in this state without?

Certificate of Authority

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as?

Coercion

Controlled Business Definition

Is any coverage written on a producers own life, health, or property, &/or that of the producers immediate family or business associates.

Surplus Lines Insurance

Is written by unauthorized insurers on an unregulated basis.

If the Commissioner believes that an unauthorized person is engaging in the business of insurance of the provisions of the Insurance Code, creating an immediate danger to the public safety, the Commissioner may do what?

Issue an emergency cease & desist order.

No lender may require a borrower under a loan secured by real property to provide hazard insurance coverage on that property in an amount exceeding the replacement value of the improvements on the property. How does the violation of law affect the validity of the loan?

It does not affect the loans validity.

Which would be an allowable reason for an insurer to refuse to issue a fire insurance policy?

Location in an immediate threatened area.

When any person has reason to believe that a fire loss may have caused by other than accidental means or that any insurance claim may be fraudulent, such person....?

MAY notify an authorized agency.

Sole proprietors, partners, and corporate officers actively engaged in business...

May elect to be included by endorsement as an employee of the insured employer.

If an insurer offering personal lines of property & casualty insurance uses credit information in underwriting or rating a consumer, the insurer or producer must disclose to the consumer that it may obtain credit information, such disclosure....?

Must be given in writing or in the same medium as the application for insurance is taken.

A licensee has met licensing qualifications for Life, Health, Property, & Casualty insurance. How many separate licenses will the Department of Insurance issue?

ONE license.

How often must insurance companies doing business in Colorado file financial statements with the Commissioner?

Once a year

All insurance company's must file a financial statement with the Commissioner when?

Annually, on or before March 1st.

In order to get a nonresidential license in the state of Colorado, a producer must?

Apply & pay a fee to a nonresident state that reciprocates.

The requirement that producers must account for all insurance funds collected, and NOT commingle those funds with their own is known as?

Fiduciary Responsibility

An insurance producer must renew his/her license by what date?

Last day of the producer's birth month every 2 years

Defamation Definition

Occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition of any person or a company.

A transportation network company must have proof that it or other drivers under it have...?

Primary Liability Insurance Coverage

Insurers must complete claims investigations...?

Promptly

If an insurer intends to either cancel or non-renew a Homeowners policy, it must mail or deliver to the named insured advanced notice of at least how many days?

30 days

If an insurer issues a binder during a period in which the insurer assesses the risk related to an individual's real and personal property for the purposes of Homeowners Insurance, the insurer must provide notice to the potential insured that the documents are conditional and that the insurer has how many days to evaluate the issuance of a policy?

30 days

Within how many days are insurers required to notify the Commissioner that a producer's employment has been terminated?

30 days

Any address change must be reported within what time period?

30 days & in writing

An individual seeking a license to sell insurance must complete a pre-licensing program that includes how many hours pertaining specifically to state laws related to the line of authority?

4 hours

A producer is required to remit premiums from a trust account to the insurer within how many days of receipt?

45 days

An insurer wishes to cancel Commercial Liability Policy. The policy has been in effect for more than 60 days and the cancellation is due to a reason other than non payment of premium. How many days before the effective date of cancellation must be the insurer send notice of cancellation to the insured?

45 days

If an insurer decides that it will NOT renew a commercial fire policy at the expiration date of the policy, how many days prior notice must they give to the insured of their intention?

45 days

Insurance Producer or Producer means?

A person required to be licensed under the state law to transact insurance, which included soliciting, negotiating, delivering, or renewing insurance contracts.

Colorado law requires resident producers to complete 24 hours of state approved continuing education courses every...?

2 years

An insured received a binder for a Homeowners policy 10 business days ago. How much longer will the binder be in effect?

20 business days (they will have 30 total business days, starting on the effective date of the conditional coverage.

An Insurer who frequently misses deadlines to respond to inquiries from the Division of Insurance may be fined, for each violation, as much as?

$5,000

The maximum amount that a bail bondsmen may charge an innocent person who is arrested...?

$50 or 15% of the bond amount, whichever is greater.

A person was found guilty of an unfair trade practice of defamation. What is the maximum monetary penalty the person may have to pay?

$500

An insurer misses the deadline to respond to an Examination Request from the Division of Insurance. If this is the company's first violation, it can face a penalty of...?

$500

A certification proving that an applicant for a license has completed the required pre-licensing education is valid for how long?

1 Year

When cancelling a Homeowners policy for nonpayment of premium, how many days advance notice must be given to the insured?

10 days

The main purpose of 'rate regulation' is to make sure rates are...?

Adequate

The failure for an insurer to have on file a summary disclosure form is considered?

An unfair trade practice

The failure of an insurer to have on file a summary disclosure form is considered?

An unfair trade practice

How often can an consumer request that the insurer pull his/her credit report?

Annually

If the Commissioner believes a person is engaged in unfair business practices, what should the Commissioner do?

Conduct a hearing for the person to show cause.

If an injured employee also receives disability payments from another source, Workers Compensation disability benefits may be...?

Coordinated with those other benefits.

A producers appointment with an insurer has been terminated. Under what circumstances can the producer sue the insurer or the Commissioner for information provided during the producer investigation?

If the termination was a result of willful & malicious behavior.

Any request to modify an insurance license must be submitted to the Commissioner...?

In writing by the licensed producer.

Whenever an insurance rate is clearly insufficient to sustain projected losses and expenses, or if used, will tend to create a monopoly in the market for that kind of insurance, the rate will be deemed to be...?

Inadequate

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of?

Rebating

A producer wants to start using an assumed name for his business. What is required prior to the use of the name?

Register the name with the Commissioner.

What is a requirement for producers who want to start selling variable life insurance & annuities?

Register with FINRA & pass the Series 6 Examination

A producer failed to meet the continuing education requirement by license renewal date, so the license was cancelled 10 months ago. What does the producer have to do to restore his license?

Reinstate the same license within 12 months of the lapse.

The Commissioner is conducting an examination of a foreign company located outside of Colorado. Who is responsible for the cost of the examination?

The Foreign Company

According to agency law, the insurer always represents the...?

The Insurance Company

The regulation of the insurance industry primarily rests with?

The State

In order to facilitate responses to inquiries from the Division of Insurance, company's must maintain all records for at least?

The current calendar year, plus the two prior calendar years.

Who is responsible for covering the expenses associated with the examination of domestic insurers?

The examined insurer

A friend helped an insurance producer sell an insurance policy. The producer can share the commission with the friend if?

The friend is licensed in the same line of insurance.

If a driver excluded from all coverage operates the insured vehicle and is involved in an accident, the insurer will not be liable for any loss or claim...

Under any circumstances, whether or not the driver was the cause of the loss.

A lender is requiring that a borrower purchases an insurance policy through a particular insurer, as a condition to the extension of credit. This is an example of?

Unfair practice of Coercion

Upon the renewal of an affected policy, the insurer must furnish the required disclosure summary form to the policyholder:

When there are changes in the major coverages, exclusions, or changes in the factors considered in cancellation, non-renewal, or premium increases.

When is an insurer allowed to add optional or enhanced coverages that increase an insured's premium on a motor vehicle?

Whenever the client has given express consent.

When the policyholder of a commercial policy operates in more than one state, the policy may include provisions to determine disputes arising from claim handling procedures, cancellation, or nonrenewal. These disputes will be governed by the state....

With the largest percentage of premium charged.

If an insurance producer allows his/her license to lapse, within how many months of the due date of the continuation fee may the producer reinstate the license without having to pass a written examination?

Within 12 months

Coercion

is to require, as a condition to a loan, that the applicant purchase insurance from a specific insurer.

Insurance companies must provide a complete & accurate response to an Examination Request/Comment Form or Examination Request/Memo Form within?

•10 calendar days from the date on the form, unless another time period is specified in writing. **For any other inquiries from the Division of Insurance, companies must provide a complete & accurate response within 20 calendar days from the date of the inquiry.

What are the continuing education requirements for the state of Colorado?

•24 hours of Commissioner approved CE Classes/courses/programs. •Out of the CE hours, 3 hours must be courses in ethics. •3 hours must be for courses in homeowners insurance coverage. •At least 18 of the 24 hours must be in approved courses in the authorities for which the producer is licensed. •Up to 12 CE hours may be carried over to the next licensing period if completed within 120 days before the license continuation date. •If the producer holds more than one license in this state, the required CE hours must be completed within 24 hours after the date of the first license renewal. •The Commissioner may grant an extension of time, up to 1 year, with the continuing education requirements of this regulation.

All Insurance companies doing business in the state of Colorado are required to make a statement under oath and file it with the Commissioner how often & must include?

•Annually (on or before March 1) •Must Include the Following: -The amount of all premiums collected during the year ending the last day of preceding December. -The amounts actually paid to policyholders. -The amount of insurance reinstated in other companies authorized to do business in this state and the amount of premiums paid. -The amount of insurance reinsured in companies (naming them) NOT authorized to do business in this state and the amount of premiums paid. -The amount of reinsurance accepted from admitted companies & the premiums received from such reinsurance, with the name of the companies so reinsured.

Rebating Definition

•Any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer & acceptance of a rebate are illegal. •Rebates may include: -Rebates of premiums payable on the policy. -Special favors or services -Advantages of the dividends or other benefits -Stocks, bonds, securities, & their dividends or profits.

The following may result in a $500 Civil Penalty for an initial violation, & may be increased up to a maximum of $5,000 for each subsequent violation:

•Failure to provide a complete & accurate response to a Division inquiry. •Failure to request an extension to a specific time period. •Failure to provide a complete & accurate response to a division inquiry when an extension is NOT granted.

Type 2 Lines of Authority - Regulated by open competition between insurers:

•Fire •Casualty •Inland Marine •Title •Credit •Workers Compensation & Employer Liability incidental to & written in connection w/ rates filed by insurers. •All kinds of insurance that are subject to this regulation.

Type 2 Insurance - That do NOT require the Commissioner's prior approval:

•Rates •Schedule of Rates •Rating Plans •Rating Classifications & Territories •Rating Rules •Rating Manuals

Type 1 Insurance

•Requires prior filing & approval of rating information, and is subject to all provisions of this statute unless specifically excluded by the terms. •Includes the following types of insurance: -Workers Comp & Employers Liability -Assigned risk motor vehicle insurance -Any other kinds of insurance classified as Type 1 by the Commissioner

The Commissioner of Insurance is responsible for?

•Supervise insurance business •Licensing •Approves policies & forms •Enforce insurance laws & impose penalties for violations. •Conduct examinations, investigations, & hearings

Whenever the Commissioner determines NOT to renew or to deny an application for a license, who & how will the Commissioner notify?

•The Commissioner will notify the licensee in writing. •The Commissioner will also notify the central office of the National Association of Insurance Commissioners (NAIC)

All insurance companies doing business in the state of Colorado must maintain all books, documents, & other business records for how long?

•The current calendar year, plus the 2 prior calendar years. •This includes any internal & external communications.

Unfair Claims Practices

•Misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue •Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies •Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies •Refusing to pay claims without conducting a reasonable investigation based on all available information •Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed •Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear •Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds •Attempting to settle a claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or principal advertising material accompanying or made part of an application •Attempting to settle claims on the basis of an application that was altered without notice, knowledge, or consent of the insured •Making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made •Making known to insureds or claimants a policy of appealing arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration •Delaying the investigation or payment of a claim by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information •Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage to influence settlement under other portions of the insurance policy coverage •Failing to promptly provide a reasonable explanation of the basis relied on in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement

Of the required 50 hours of pre-licensing education, what is the minimum number of hours an applicant must complete on the subject of ethics?

3 hours

After a client signs a disclosure statement regarding additional fees charged by a producer, the producer must keep a copy of the statement for at least?

3 years from the date of completion of the services.

How long does an insurer have to complete any inspection associated with the underwriting of a new property?

30 BUSINESS Days

How many days do producers have to report administrative actions taken against them in another jurisdiction?

30 days

If a homeowner binder is issued, how many business days will the insurer have to decide whether to issue the policy?

30 days

If an insurer intends to either cancel or non-renew a Homeowners policy, it must mail or deliver to the named insured advance notice of at least...?

30 days

How must notice of cancellation or non-renewal of a Homeowners policy be given to the insured?

By first class mail only

In setting rates, insurers should give consideration to past & prospective loss and expense experience and to catastrophic hazards based on which geographic area?

Colorado

The mixing of premiums belonging to the insurer or the insured with the producer's personal funds not related to the business is called?

Commingling

All Workers Compensation Insurance issued in Colorado must include provisions for...?

Employers legal liability

How often must an insurer who sells personal lines of property & casualty policies recalculate a consumer's insurance score or obtain an updated credit report?

Every 36 months

How often will the Commissioner examine domestic insurers in the state of Colorado?

Every 5 years

What is a Certificate of Authority?

Is a license issued by the state of Colorado Insurance Commissioner to insurers wanting to do business in Colorado.

Which specific service as an insurance producer are NOT allowed to charge a fee to the applicant or policyholder?

Qualified retirement plan design for which the producer receives a commission from the insurer.

A producer who who is licensed to transact several types of insurance wants to remove a line of authority from his license. What should the producer do?

Submit an appropriate form to the Commissioner and return the license for amendment

What is the punishment for any person in violation of the provision on defamation of other company's transacting insurance?

•Guilty of a misdemeanor •A fine of $500 •Or by imprisonment in county jail up to 1 year, or both fine and jail time.

Lines of Authority incude:

•Life •Accident & Health •Variable Life & Variable Annuity Products •Property •Casualty •Bail Bonds •Limited Lines of Credit Insurance •Title •Surplus Lines •Travel-Ticket-Selling •Personal Lines (Personal & Casualty Insurance, primarily non-commercial •Any other line of insurance permitted under the state law or regulation

Which of the following entities is appointed to oversee the business of insurance and to ensure that the insurance laws of Colorado are enforced?

The Commissioner of Insurance

An advanced notice of cancellation or non-renewal of a Homeowners policy mailed to the insured must include...?

The reasons for termination.

When a loan is secured using real property as collateral, the lender is prohibited from requiring the debtor to insure the property for an amount greater than...?

The replacement cost of the property.

If an Insurance Producer has his/her license revoked or if the insurer surrenders their license to avoid disciplinary action by the Commissioner, how long before the insurance producer is eligible to apply for a license?

They will be eligible again after 2 years after the date the license is revoked or surrendered and returned to the Commissioner.

An Insurance Producer license is revoked/surrendered they MUST surrender or returned PROMPTLY to the Commissioner by personal delivery or by certified registered mail within how many days?

Within 15 days If the license has been revoked, suspended, or terminated for any reason.