The Colorado Division of Insurance and the Commissioner
Powers and Duties of the Commissioner
Ref: C.R.S. 10-1-104; 10-1-105; 10-1-108; 10-1-109; 10-1-201 through 204; 10-3-105; 10-3-208; 10-3-1106
The Commissioner of Insurance, appointed by the Governor, serves as the chief regulator of insurance in Colorado. The Commissioner’s duties include:
- Enforcing insurance laws and ensuring companies and producers comply with all statutory requirements.
- Issuing, suspending, and revoking licenses of insurers and producers.
- Approving policy forms and rates for property, casualty, life, and health insurance.
- Examining insurers’ financial condition to maintain solvency and protect policyholders.
- Conducting investigations and hearings to address consumer complaints or alleged violations.
- Issuing regulations (found in Title 3 of the Colorado Code of Regulations) to implement state insurance laws.
- Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years.
- Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate.
In practice, the Commissioner ensures that the insurance marketplace operates fairly and that consumers are treated honestly and transparently.
Hearings and Penalties
Ref: 10-2-801; 10-2-804; 10-3-1104; 10-3-1107 through 1109; 10-3-1111
When a violation of Colorado insurance law occurs, the Commissioner has authority to:
- Conduct formal hearings to determine if a person or entity has violated state insurance laws.
- Issue cease and desist orders to stop illegal practices.
- Impose civil penalties or license suspensions/revocations for misconduct.
- Refer cases to law enforcement for criminal prosecution, when applicable.
Common reasons for hearings include:
- Unfair trade practices (e.g., misrepresentation, rebating)
- Violation of fiduciary duties
- Failure to maintain continuing education requirements
- Fraud or misappropriation of funds
If the Commissioner finds that a producer has violated the state’s insurance laws, the Commissioner may order the producer to cease and desist. The recipient of a cease and desist order has not had their registration suspended or revoked, but is required to stop or limit the activity addressed in the order.
Hearing and penalties
A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Colorado law, and may ask a court to review the final order. Under Colorado’s unfair practices law the hearing comes first: the Commissioner issues a cease and desist order if, after a hearing, a violation is found (C.R.S. 10-3-1108(1)).
A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes.
License Suspension and Revocation
Ref: 10-2-401; 10-2-801 through 804; 10-3-904.6; 10-3-904.7; 10-3-1108
Suspend, revoke or non-renewal
The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:
- Providing false information on the application for an insurance license.
- Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
- Being found guilty of a violation or noncompliance of insurance regulations and laws.
- Committing fraud while attempting to obtain an insurance license.
- Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
- Providing false information in reference to the terms and conditions of an insurance contract.
- Having been convicted of a felony or of a misdemeanor involving moral turpitude (C.R.S. 10-2-801(1)(g)(I)).
- Having admitted or been found to have committed any insurance unfair trade practice or fraud.
- Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
- Having had a prior insurance license revoked or suspended in a state other than Colorado. Under the NAIC’s model act, a license denied in another state is also a ground.
- Using another person’s identity and forging their name on an insurance application.
- Being found guilty of using unethical practices or cheating on an examination for an insurance license.
Records and Requests for Information
Ref: 1-1-7; 1-1-8
Complete and accurate records must be kept at the producer’s place of business for the current calendar year plus the two prior calendar years (3 CCR 702-1, Regulation 1-1-7 § 5.A). The records must show every contract placed, the named insured, changes or amendments, and premiums received with each transaction.
Records may be inspected at any time by the Division of Insurance or any representative appointed on their behalf.
The Commissioner maintains public records of insurance companies, producer licenses, and disciplinary actions. Insurance professionals must respond promptly to requests for information from the Division of Insurance. In Colorado, a response to a Division inquiry is due within 20 calendar days of the inquiry, unless a statute, regulation or the Division sets another period (3 CCR 702-1, Regulation 1-1-8 § 5.B). Failure to comply may result in administrative penalties or disciplinary action.
Policy forms
Insurers file their policy forms with the Commissioner.
Depending on the line of insurance and the form, a state may require approval before a form is used, often with a period after which a filing that has not been acted on is deemed approved, or may allow the form to be used as soon as it is filed (“file and use”).
Under the usual conformity rule, which many states’ insurance codes write into law, a policy provision that conflicts with state law does not make the policy invalid: the policy is read as amended to conform to the law.
Licensing and producers’ legal responsibilities
Persons Required to Be Licensed
Ref: 10-2-103(6); 10-2-105; 10-2-201; 10-2-401; 10-2-404; 10-2-407; 10-2-408; 10-2-412; 10-2-416; 10-2-701; 10-2-702; 10-2-801; Reg. 1-2-10
Any person who sells, solicits, or negotiates insurance in Colorado must hold a valid producer license. Key points:
- Separate licenses exist for Life, Accident & Health, Property, Casualty, and Personal Lines.
- Business entities (agencies) must also be licensed.
- Nonresident producers may obtain reciprocal licenses if licensed in good standing in their home state.
- Temporary licenses may be issued in certain situations, such as the death or disability of a producer.
Notice of change of name or address
Under the NAIC’s model act, the licensee reports a change of address to the regulator within 30 days of the change.
The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it.
Company regulations
An insurance company must be authorized by the Division of Insurance to conduct business in Colorado. To receive a certificate of authority, the company applies to the Commissioner and files its charter or articles of incorporation, financial statements showing that it meets the state’s capital and surplus requirements, and the other documents and fees the state requires.
Capital and surplus requirement
A company authorized to conduct insurance business in Colorado must meet minimum corporate standards. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required. In Colorado, the Commissioner may revoke or suspend an insurer’s certificate of authority for any reason the insurance code specifies, including insolvency or impairment (C.R.S. 10-1-110(1)).
Payment and Acceptance of Commissions or Fees
Ref: 10-2-401; 10-2-702; Reg. 1-2-9
A commission or other consideration for selling, soliciting or negotiating insurance may be paid to, and accepted by, only a person licensed for that work (C.R.S. 10-2-702(1)). An insurer or producer may pay commissions or other consideration to an insurance agency, a business entity, or a person who does not sell, solicit or negotiate insurance in Colorado, unless the payment would be an illegal inducement (C.R.S. 10-2-702(2)).
Producers must disclose any service fees charged directly to clients and may not charge unauthorized or hidden fees.
Fiduciary Responsibility and Commingling
Ref: 10-2-704; Reg. 1-2-1
Producers hold all premiums and return premiums in a fiduciary capacity.
They must:
- Keep client funds in a separate trust account, not mixed with personal or business operating funds.
- Remit premiums promptly to insurers.
- Maintain accurate financial records subject to DOI examination.
Commingling client funds with personal funds is grounds for disciplinary action or license revocation.
Pre-Licensing and Continuing Education
Ref: 10-2-301; Reg. 1-2-4; 1-2-5
Any individual applying for a Colorado resident producer’s license must:
- Be at least 18 years old
- Be a resident of Colorado before submitting an application
Required pre-licensing course and exam
Before you can sit for the pre-licensing exam, Colorado requires you to successfully complete a pre-licensing course approved by the Division of Insurance.
Fingerprints/background check
The Commissioner reviews an applicant’s background before issuing a license, and many states require applicants to submit fingerprints for a state and FBI criminal history check as part of the application.
Non-resident license
A producer licensed in another state can obtain a Colorado nonresident license without taking Colorado’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:
- Is currently licensed as a resident, and in good standing, in the home state
- Has applied (the home-state application or the Uniform Application) and paid the fees
- Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)
Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.
Temporary license
Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:
- The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
- A member or employee of a business entity producer, on the death or disability of its designated producer
- The designee of a producer entering active military service
Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.
The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.
The NAIC’s model act limits a temporary license to 180 days.
Military service
Under the NAIC’s model act, a producer who cannot meet license renewal requirements because of military service, or because of another extenuating circumstance such as a long-term medical disability, may request a waiver of those requirements and of any examination, fine or sanction for missing them.
Renewal and reinstatement
A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.
Each state sets its own renewal cycle.
A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.
Under the NAIC’s model act, a lapsed license may be reinstated within 12 months of the renewal due date, for a penalty of double the unpaid renewal fee. Each state sets its own window and fee, and after the window closes the person must qualify for a new license.
Continuing education
All states, including Colorado, have continuing education (CE) requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Many states also require continuing education of other licensees, such as adjusters or title or bail bond agents, while exempting producers who hold only certain limited lines; each state’s law says which.
Individuals licensed in Colorado must complete continuing education before renewing their license, part of which must cover ethics. The number of credits required, and how they must be divided between your line of authority, ethics, and courses of your choice, is set by state law and published by the Colorado Division of Insurance.
Unauthorized Entities
Ref: 10-3-903 through 10-3-904.5; 10-3-906; 10-3-908
Selling insurance for an unauthorized or nonadmitted insurer is prohibited unless conducted through a licensed surplus lines broker.
Fraudulent producer representation
An insurance producer who represents to the public that they are licensed to conduct insurance business in Colorado, but has not passed the appropriate licensing examination, is in violation of the regulation.
Any means of public communication are included in the definition of impersonating a licensed producer, including advertisements, letterheads, circulars, business cards, and other methods of representation.
Producers must ensure that the insurer is properly authorized to conduct business in Colorado. A producer found guilty of conducting business in Colorado in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.