5.- Colorado Statutes, Rules, and Regulations Common to All Lines

Which of the following is a specific service for which an insurance producer is 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 is subject to criminal prosecution in another jurisdiction. Within what time frame must the producer report this fact to the commissioner?

Within 30 days after the initial pre-trial hearing

An insurer who willfully violates a single provision of an unfair trade practice regulation may be fines

$30,000 *In Colorado, an insurer who knew or reasonably should have known it was in violation could be fined up to $30k for each violation, not to exceed an aggregate of $750k annually

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

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

2 years

All licensed producers are required to inform the commissioner in writing of any change of address within how many days of the change?

30 days

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 *Any person in violation of the provision on defamation is guilty of a misdemeanor and will be punished by a fine up to a $500 or by imprisonment in the county jail up to 1 year, or by both

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

30 days

When a producer's license is terminated, the producer must remit the license to the commissioner within how many days?

15 days

All of the following are regulations for producers using an assumed name EXCEPT

The name may be similar to another name currently on file

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of

coercion

Which of the following would NOT be considered an unfair and deceptive practice?

controlled business *Boycott, coercion and intimidation, false advertising and misrepresentation are all unfair and deceptive practices

In order to facilitate responses to inquiries from the Division of Insurance, companies must maintain all records for at least

The current calendar year, plus the 2 prior calendar years

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

The foreign company

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

Of the required 59 hours of pre-licensing education, what is the minimum number of hours an applicant must complete on the subject of ethics?

3 hours

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

Every insurer in the state of Colorado is required to prepare, implement and maintain an insurance anti-fraud plan. In addition, a summary of the company's anti-fraud efforts must be submitted to the commissioner on

An annual basis

In order to get a nonresident license in this state, a producer must

Apply and pay a fee to a nonresident state that reciprocates

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

At least once every 5 years

Whenever the commissioner issues a cease and desist order, how will that order be delivered to the person in violation?

By certified mail

Which of the following is a producers fiduciary duty?

Handling premiums

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumstances When a company criticizes the financial situation of another company, with the intention of injuring that company, it has committed an illegal trade practice called "defamation."

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

In writing by the licensed producer

An insurer receives an examination request form dated June 2 from the division of insurance. The insurer must respond by

June 12 *Companies must respond to an examination request/comment form or examination request/memo form within 10 calendar days from the date on the form

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

Once a year

A producer's license has been suspended for noncompliance with continuing education requirements. What is the producer'a duty regarding the license?

Promptly return it to the Commissioner

All of the following are true regarding rebates EXCEPT

Rebates are allowed if it's in the best interest of the client.

All of the following provisions must be included in an insurer's anti-fraud plan EXCEPT

Suspension of producer's licensure *They must have reporting of all suspected insurance fraud to the appropriate law enforcement entities, education of employees about fraud detection and contracting for one or more fraud investigations

The Governor has asked the Commissioner to examine an insurance company after a group of insureds has filed several complaints against the company. Who will pay for this examination?

The insurance company

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 which of the following?

Unfair practice of coercion

Insurers must complete claims investigations

promptly

What is the maximum a producer may be fined for violating a cease and desist order?

$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 *An insurer who fails to respond to a Division of Insurance inquiry by the deadline faxes a $500 civil penalty for the initial violation. Fines may reach up to $5,000 for subsequent violations

Which of the following would NOT be a violation of state insurance regulations?

Agent C uses her license to write only business other than controlled.

Which type of insurers will be held liable for their actions in court?

All companies; authorized and unauthorized

An insurer may not transact insurance in this state without which of the following?

Certificate of authority

The commissioner may revoke a producer license for all of the following reasons EXCEPT

Commingling of funds, misrepresenting the terms of a policy and accepting business from an unlicensed person EXCEPT acting in a fiduciary capacity

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

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Defamarion

When would a producer be able to transact insurance through an unauthorized insurer?

If surplus lines insurance

An insurance producer is prohibited from charging separate fees for any of the following services EXCEPT

**A.- Financial planning B.- extending business hours C.- making copies of insurance documents D.- quoting premiums *Producers are prohibited from charging separate fees in addition to those contemplated in the rate of filing. Insurance producers may charge fees for specific services which are beyond the scope of services pertaining to insurance policies, including risk management services, financial planning, investment counseling and similar.

An insurance producer just sold an insurance policy to his sister. What kind of business is this?

Controlled

How often will the commissioner examine domestic insurers in this state?

Every 5 years

Which of the following best describes the unfair trade practice of defamation?

Making derogatory oral statements about another insurer's financial condition

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

misrepresentation

Under Colorado's Unfair Claims Practices regulations, when denying a claim an insurer must do all of the following EXCEPT

**A.- Pay a claim that occurs after the grace period has ended B.- indicate to the claimant which section of the policy they are relying upon C.- conduct a reasonable investigation D.- respond promptly to claims communications

All of the following would be considered rebating EXCEPT

An agent misrepresents policy benefits to convince a policyowner to replace policies *Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal

All of the following are considered to be misuses of fiduciary funds EXCEPT

Collecting interest on customer balances held in a producer's trust account *Producers who act in an agency capacity are required to maintain a separate trust account for premiums. Any interest earned in a trust account belong to the producer. Trust accounts may not be used as a personal asset or as collateral for a loan to a producer; operating expenses may not be paid out of the trust account. Producers must remit a return premium to an insurer within 30 days after the producer received it from the insurer.

Which of the following will not be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

Producers will be deemed to be using their license primarily to write controlled business if, during any 12 month period

The total premiums on controlled business exceed the total premiums on all other business written

If the Commissioner believes a producer has committed a violation of an insurance law, the Commissioner will hold a hearing. What is the purpose of the hearing?

To allow the aggrieved party to be heard

All of the following statements are true regarding producer appointments EXCEPT

**A.- a producer may only hold an appointment with one insurer B.- companies may appoint either individual producers or agencies C.- a producer must hold at least one appointment D.- the producer must be appointed at the time business is placed with an insurer *a producer may hold just one appointment and be known as a captive agent or can represent multiple insurers, therefore holding multiple appointments. A producer must hold at minimum one appointment, but may hold as many as he or she would like

What is the minimum age for producing licensing in this state?

18

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

30 days

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

Discrimination. *Permitting individuals of the same class to be charged a different rate for the same insurance is an unfair trade practice of discrimination.

Noncompliance with the regulation regarding fees charged by producers may result in which of the following penalties?

Fines and license suspension or revocation

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

Register the name with the dommissioner

Which of the following is a requirement for producers who want to start selling variable life insurance and annuities?

Register with FINRA and pass the Series 6 examination

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

Sexual orientation

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchased the insurance policy today

Which of the following accurately describes the ability of a licensed Colorado resident producer to become licensed in other states?

The producer can get a nonresident license in all reciprocal states

If an insurance producer allows his or 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 monrhs

What is a requirement for notifying the Commissioner of any change of address?

Within 30 days, in writing

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

In the state of Colorado, an unfair trade practice of defamation is considered a

Misdemeanor

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

If the termination was a result of willful and malicious behavior

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status

Which of the following is a requirement for an insurance agency transacting insurance in Colorado?

It must obtain a producer license

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies *Exaggerating the benefits provided in the policy, stating that the competitors will arbitrarily increase their premiums each year and stating that the insurance policy is a share of a stock are all illegal

All of the following are unfair claims settlement practices EXCEPT

**A.- Suggesting negotiations in settling the claim B.- refusing to pay claims without conducting a reasonable investigation C.- failing to adopt and implement reasonable standards for settling claims D.- failing to acknowledge pertinent communication pertaining to a claim *When settling claims, negotiations can come into play

All of the following would be considered rebating EXCEPT

**A.- an agent misrepresents policy benefits to convince a policyowner to replace policies B.- an agent offers tickets to a baseball game as an inducement to buy insurance C.- an agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him D.- an agent offers to share his commission with a policyholder

If a governmental agency in this state files an administrative action against an insurance licensee, the report of the action to the commissioner must include all of the following EXCEPT

A copy of the initial complaint, the order resulting from the hearing, other relevant documents of the complaint or hearing EXCEPT the producer's production records for the prior year

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

Coercion

An insurer decides an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal *It is illegal to participate in any boycott, coercion or intimidation that is intended to restrict fair trade or create a monopoly

A producer 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.

Regarding investigations of insurers, the Colorado Commissioner of Insurance may

Subpoena witnesses when we he/she deems necessary

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

5 years following license continuation

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

According to the Colorado fraud statues, every licensed insurance company doing business in Colorado is required to do all of the following EXCEPT

**A.- pay a fee to the state of Colorado to protect the insurer against fraud B.- display a warning against insurance fraud on applications, policies, and claim forms C.- report suspected insurance fraud to the appropriate law enforcement and regulatory entities D.- prepare and follow an anti-fraud plan

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

1 *An insurance producer may receive a single license that included all of the lines of authority for which requirements have been met

Producers who wish to sell variable life insurance in this state must be registered with what entity?

FINRA

A producer enrolls in a continuing education (CE) course that is taught by his immediate supervisor. The course is worth a total of 10 credit hours. How many hours will the producer be able to count towards his total of 24 required CE hours?

0 *Courses taught by the producer's immediate supervisor or employee cannot be counted as part of the 24 hours required for CE

The Division of Insurance has requested information regarding an insurer's underwriting policies via e-mail. How many days does the insurer have to respond to this request?

20 day's

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

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination. *Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

If a person knowingly presents false information on an insurance application and intends to deceive the insurer for financial gain, it is considered to be

Fraud

To obtain a nonresident producer's license in this state, a prospective licensee must

Have a similar license in his or her home state

When the commissioner believes that a person has engaged in an unfair method of competition or an unfair trade practice, before issuing a cease and desist order, the commissioner misr

Hold a hearing

What is the maximum civil penalty per violation if an unauthorized entity violates the Commissioners cease and desist order?

$25,000 *The commissioner may take the following actions against an unauthorized insurer that violates a cease and desist order: impose a civil penalty of $25k per violation, or direct the entity to make complete restitution to all parties affected by the violation, or both

All insurers that terminate employment with a producer are required to notify the Commissioner within how many days following the effective date of the termination?

30 days

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

45 days

Which of the following is NOT a penalty for violating provisions of the insurance code?

Imprisonment *in addition to suspension of an insurance producer license, any person who violates any provision of the insurance code bay be subject to civil penalty (monetary fine) or an order to pay for contractual obligations (for example, when the violation caused the failure to pay the claim)

A producer failed to meet the continuing education requirement by the 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

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

Rebatinf

Which of the following scenarios would be an example of coercion on the part of a lender?

Requiring the debtor to acquire a policy from a specified produxer

If a company has transacted insurance in this state without a Certificate of Authority, which of the following is true of its obligations for the policies sold?

The company can still be liable for its policies in any court of this state

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

Fiduciary responsibility *Money collected with respect to an insurance transaction must be held in a position of trust by the producer or broker

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

An insurer with their home office in another state may do business in Colorado if

They obtain a Certificate of Authority in Colorado

Believing a producer has violated provisions of the insurance code, the commissioner will schedule a hearing

To allow the producer to show why penalties should not be assessed