Colorado Statutes, Rules and Regulations Common to All Lines
All financial companies are required to make statement under oath and file with commissioner annually (before/on March 1) including the amounts of
-all premiums collected during the year ending the last day of preceding December - actually paid to policyholders -insurance reinsured in other companies not authorized and authorized to do business in this state and the amount of premiums paid -reinsurance accepted from admitted companies and the premiums received from such insurance, with name of companies so reinsured
A licensee has met licensing qualifications for Life, Health, Property, and Casualty Insurance. How many separate licenses will the Dept. of insurance issue?
1 *one single license that includes all/multiple lines of authority
A certificate proving that an applicant for a license has completed the required prelicensing education is valid for how long?
1 year
Requirement for application for license:(7)
1. 18+ 2. Not committed any act which is ground for denial, suspension, revocation 3. resident of state, or meet state requirements of nonresident licensure 4. Nonresident- furnish Commissioner with current cert. of resident license 5. satisfied min. prelicensing education and passed exam 6. paid prescribed license fee 7. Competent, trustworthy, of good moral character and business reputation
Companies must provide a complete and accurate response to an Examination Request/ Comment Form or Examination Request/ Memo Form within
10 calendar days from the date on the form *all other forms: 20 days
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
Which of the following would NOT be a violation of state insurance regulations? a. Agent A uses her license to write only insurance for herself and her immediate family b. Agent B charges his clients a consulting fee, in addition to the premium for placing a policy c. Agent C uses her license to write only business other than controlled d. Agent D collects premiums due on policies and deposits the funds in his own personal account.
Agent C uses her license to write only business other than controlled
An insurer who willfully violates a single provision of an unfair trade practice regulation may be fined
$30,000 *annual limit $750,000
What is the maximum a producer/individual 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 *max penalty of $5,000
The commissioner duties include: (5)
-supervise insurance businesses -licensing -approve policies and forms -enforce laws and impose penalties for violations -conduct examinations, investigations, and hearings
What is the maximum an insurer may be fined for violating a cease and desist order?
$10,000
Any person in violation of the provision of defamation is guilty of a misdemeanor and will be punished by
$500 fine max. or imprisonment in jail for 1 year, or both
In CO, the required continuing education training must be completed w/in
24 months after the producer's license renewal date
A producer is required to remit premiums from a trust account to the insurer within how many days of receipt?
45 days
When should an insurer that terminates employment with a producer notify the Commissioner?
Within 30 days
3 requirements for a response to inquiry extension
1. no later the 5 pm mountain time on business day prior to response due date 2. include specific period of time extension 3. state detailed reason for extension
Minimum age for producer licensing in the state
18
In which of the following situations is it legal to limit coverage based on marital status?
Never
According to agency law, the producer always represents the a. State Insurance Dept. b. Insurance company c. client d. public
b. Insurance company
Which of the following is a producer's fiduciary duty?
handling premiums
in the state of Colorado, an unfair trade practice of defamation is considered a(n)
misdemeanor
How long must all insurance companies doing business in the state maintain all books, documents, and other records?
the current calendar year plus 2 prior calendar years
if after a hearing the Commissioner determines that a cease and desist order has been violated, the Commissioner may impose a civil penalty of
$25,000 per violation -or, direct the person to make complete restitution to all parties affected by the violation
Reinstatement of license is valid for how long following cancellation due to failure to meet continuation requirements
1 years (12 months)
Colorado law required resident producers to complete 24 hours of state approved continuing education courses every
2 years
Continuing education requirements:
24 hours; 3 hrs ethics -3 hrs in HO coverage for those authorized to sell property or personal lines -18 hrs must be in approved courses -up to 12 CE hours may be carried over to next period if completed w/in 120 days before license continuation date
If a producer holds more than one license in CO, the required CE hours must be completed w/in
24 months after the date of the first license renewal
A change of address or any administration action taken in another jurisdiction or by another gov't agency within
30 days, in writing, after the change or final disposition
For how many years must a producer keep supporting documentation of their continuing education completion?
5 years following license continuation
As a condition of initial licensure, an individual applicant for a produce license in one line of authority will be required to complete approved prelicensing education of how many hours?
50 hours (including 3 hrs ethics & 4 hrs state laws
Whenever the Commissioner issues a cease and desist order, how will that order be delivered to the person in violation?
By certified mail (same as registered)
When would a producer be able to transact insurance through an unauthorized insurer?
If surplus lines insurance
Which of the following is a requirement for an insurance agency transacting insurance in CO? a. it must obtain a producer license b. all employees must be licensed producers c.it must be a resident agency d.it must register all its members with the commissioner
It must obtain a producer license
How long must an insurance producer wait after a revoke of licensing for violations?
Not eligible to apply for new producer license for 2 years after date revoked or surrendered or returned
How often must insurance companies 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's duty regarding the license?
Promptly return it to the Commissioner within 15 days
Which of the following is a specific service for which an insurance producer is NOT allowed to charge a fee to the applicant or poilcyholder?
Qualified retirement plan design for which the producer receives a commission from the insurer *must NOT receive commission
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 w/in 12 months of the lapse
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
All of the following provisions must be included in a insurer's anti-fraud plan EXCEPT a. education of employees about fraud detection b. contracting for one or more fraud investigators c. reporting of all suspected insurance fraud to the appropriate law enforcement entities d. suspension of producer's licensure
Suspension of producer's licensure
A man desperately wants to become an insurance agent, but cannot pass the Colorado exam. His cousin offers to take the test under the man's name and passes. Three months after the license is issue that gets discovered. What will the Commissioner's action be?
The Commissioner can revoke the license
If the commissioner believes a producer has committed a violation for an insurance law, the commissioner will hold a hearing. What is the purpose of the hearing?
To allow the aggrieved party to be heard
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
Any person who willingly or knowingly testifies falsely in reference to any matter to an examination is guilty of misdemeanor and can be punished by
a fine of $5,000, 3 mo. imprisonment, or both
Solvency
ability to meet financial obligations
All of the following would be considered rebating EXCEPT? a. an agent offers to share his commission with a policyholder b. an agent offers tickets to a baseball game as an inducement to buy insurance c. an agent misrepresents policy benefits to convince a policy owner to replace policies d. an agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him.
an agent misrepresents policy benefits to convince a policy owner to replace policies
All of the following are requirements for obtaining a producer's license EXCEPT a. completion of prelicensing b. attaining age 21 c. being competent and trustworthy d. applying for a license w/in 12 months of passing the state exam
attaining age 21
Which of the following would NOT be considered an unfair and deceptive practice? a. misrepresentation b. controlled business c. boycott, coercion and intimidation d. false advertising
b. controlled business
In insurance, producers are permitted to share or split commission, providing that
both are properly licensed for the line of insurance
According to the Colorado fraud statutes, every licensed insurance company doing business in Colorado is required to do all of the following EXCEPT a. prepare and follow an anti-fraud plan b. display a warning against insurance fraud on applications, policies, and claim forms c. Pay a fee to the state of Colorado to protect the insurer against fraud d. Report suspected insurance fraud to the appropriate law enforcement and regulatory entities
c. Pay a fee to the state of Colorado to protect the insurer against fraud
To require, as a condition in a loan, that the applicant purchase insurance from a specific insurer
coercion
An insurance producer just sold an insurance policy to his sister. What kind of business is this a. internal b. personal c. controlled d. illegal
controlled
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 is prohibited from charging separate fees for any of the following services EXCEPT? a. making copies of insurance documents b. quoting premiums c. financial planning d. extending business hours
financial planning
Noncompliance with the regulation regarding fees charged by producers may result in which of the following penalties?
fines and license suspension or revocation
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 their home state
Which of the following is NOT a penalty for violating provisions of the Insurance Code? a. imprisonment b. monetary fine c. license revocation d. payment of a contractual obligation
imprisonment
Which of the following is NOT a penalty for violating provisions of the Insurance code?
imprisonment
The commissioner may examine or investigate any company or persons involved in insurance transactions as often as deemed appropriate, but at least
once every 5 years
Which of the following is incorrect with regards to Surplus Lines Insurance?
policies written by a surplus lines insurer typically contain standard coverages and forms
Insurers must complete claims investigations: a. promptly b. within 15 days c. within 30 days d. within 45 days
promptly
An inducement, or valuable consideration, offered to the insured in the sale of insurance products that is not specifically stated in the policy
rebating *offer and acceptance is illegal
The purpose of the examination is to ensure that the companies remain
solvent, and conduct business of insurance in compliance with state laws and regulations pertaining to licensing, policy forms, claims, rates, and market conduct
If a company has transacted insurance in this state w/out 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
Who is responsible for covering the expenses associated with the examination of domestic insurers?
the examined insurer
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
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
The Governor has asked the Commissioner to examine an insurance company after a group of insured's has filed several complaints against the company. Who will pay for this examination?
the insurance company
The regulation of the insurance industry primarily rests with
the state
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
Define promulgate
to make public, to put into action
Any person who fails to comply with the regulations regarding HIV testing and limitations of disclosure of test results is guilty of an misdemeanor and may be subject to a fine between
$500 and $5,000, or imprisonment in jail for 6-24 months, or both
An insurer may not transact insurance in this state w/o which of the following? a. producer's license b. certificate of insurance c. agency license d. certificate of authority
Certificate of authority
All unlicensed assistant works full time in an insurance agency. She may perform all of the following EXCEPT? a. make appointments with clients and prospective clients to meet with an insurer's agent b. assist producers in completing applications for insurance c. call prospects and collect expiration date of their existing policies d. collect premium for in-force policies
Collect premium for in-force policies
All of the following are considered to be misuses of fiduciary funds EXCEPT a. Remitting a return premium to an insured 31 days after the producer received it from the insurer b. reflecting a premium received as a business asset on the producer's financial statement c. Collecting interest on customer balances held in a producer's trust account d. using balances in customer accounts as collateral for a loan to a producer
Collecting interest on customer balances held in a producer's trust account
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
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 term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
Defamation
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a. dividends from a mutual insurer b. an offer of employment c. stocks, securities, or bonds d. an offer to share in commissions generated by the sale
Dividends from a mutual insurer
producers who wish to sell variable life insurance in this state must be registered with what entity?
FINRA & pass series 6 examination (financial industry regulatory authority)
The Commissioner of Insurance is appointed by which authority?
Governor
A producer's appointment with an insurer has been terminated. Under what circumstances can the producer sue the insurer of the Commissioner for information provided during producer investigation?
If the termination was a result of willful and malicious behavior
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
An insurance producer must renew their license by which of the following dates? a. last day of the producer's birth month every 2 years b. last day of the producer's birth month every year c. December 31st every other year d. March 1 odd-numbered year
Last day of the producer's birth month every 2 years
When deleting a line of authority, a producer needs to
return the license for amendment; submitted in writing to the Commissioner
A person who solicits, negotiates, delivers, or renews insurance contracts issued in this state needs to hold what type of license? a. producer b. managing general agent c. consultant d. limited line representative
Producer
Which of the following accurately describes the ability of a licensed CO resident producer to become licensed in other states?
the producer can get a nonresident license in all reciprocal states
All premiums received must be remitted to the insurer within how many days after receipt? Returned premiums credited?
within 45 days; within 30 days
Every insurer in the state of CO 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
All of the following are true regarding rebates EXCEPT a. dividends are not considered to be rebates b. rebates are allowed if it's in the best interest of the client c. rebates are only allowed if specifically stated in the policy d. rebating can be anything of economic value, given as an inducement to buy
b. rebates are allowed if it's in the best interest of the client
Any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates
controlled business *illegal
Which of the following statements is INCORRECT with regards to Surplus Lines Insurance? a. To sell Surplus Line Insurance, the licensee must obtain a Surplus Line Broker's License b. Before coverage is placed with a surplus line company, diligent effort must be made to place the risk with admitted insurers c. Business placed with a surplus line insurer is subject to a premium tax that must be collected by the broker d. Policies written by a surplus lines insurer typically contain standard coverages and forms
d. Policies written by a surplus lines insurer typically contain standard coverages and forms
Which of the following persons is required to hold a producer license? a. person who creates insurance advertisements b. person who takes messages related to claims c. person who administers employee benefits d. person who negotiates insurance contracts
d. person who negotiates insurance contracts
All of the following are unfair claims settlement practices EXCEPT a. refusing to pay claims w/o conducting a reasonable investigation b. failing to adopt and implement reasonable standards for settling claims c. failing to acknowledge pertinent communication pertaining to a claim d. suggesting negotiations in settling the claim
d. suggesting negotiations in settling the claim
When a producer was receiving a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
defamation
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