Licensing
Any individual applying for a Colorado resident producer’s license must be at least 18 years old and be a resident of Colorado prior to submitting an application.
Required Pre-licensing Course and Exam
Before sitting for the Pre-licensing exam, Colorado requires the successful completion of a pre-licensing course that has been approved by the Division of Insurance.
Fingerprints/Background Check
As part of the application process, you must submit fingerprints to the Colorado Division of Insurance. You should seek to get fingerprinted after passing the state exam and at least one day before applying for the license.
Controlled Business
Controlled business is written solely in the interest of the producer or their family members. Producers are prohibited from securing a Colorado insurance license to provide this form of business. Of course, as a producer you can sell a policy to yourself or your family members but you cannot obtain a license for this sole purpose.
Non-Resident License
A licensed producer will need to meet the following requirements to obtain a nonresident license:
The individual must hold a resident license in their home state and be in good standing.
The individual must complete the appropriate application and submit the required fees to the insurance department/commission in each state they wish to become licensed in.
The individual’s home state must offer equal reciprocity for the state you are attempting to obtain a non-resident license in. Currently, Colorado has reciprocation agreements with all other states.
Temporary License
A Temporary Producer license is only valid if the temporary producer is sponsored and appointed by an insurance company. A Temporary Producer license is a once in a lifetime license per line of authority and is valid for a maximum of 6 months from the date the license is issued.
Inactive Status
A Colorado resident producer who is ordered to active military duty may place his/her license on inactive status until he/she is discharged. While a license is inactive the producer may continue to receive residual or “trailing” commissions, but may not solicit or transact any new business.
Renewal Maintenance
You will need to renew your Colorado insurance license every two years. The renewal period begins 90 days prior to your license expiration date and ends on the license expiration date itself. You can renew your license online at the Colorado Department of Insurance website, assuming you have completed all mandatory continuing education requirements.
Continuing Education
All states, including Colorado, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Individuals licensed in the state of Colorado must complete 24 hours of CE prior to renewing their license. This must include 18 credits specific to your licensed line of authority, 3 credits in Ethics, and 3 credits in a category of your choice.
Notice of Change of Name or Address
Any change of name or address (residential or business) must be reported by the licensee to the Colorado Division of Insurance within 30 days of relocation. Failure to do so may result in monetary fines and/or the suspension of a license.
Company Regulations
An insurance company must be authorized by the Division of Insurance to conduct business in Colorado. To receive authorization, the insurance company must present their rate tables and articles of incorporation which include the nature and purpose of the company’s business intentions, along with the appropriate bylaws for their corporation and appropriate fees.
Place of Business
Every resident insurance producer authorized to conduct business in Colorado must maintain a place of business (with public access) within the state.
Capital and Surplus Requirement
A company that has been authorized to conduct insurance business in Colorado must maintain minimum standards as a corporation. The certificate of authority will allow the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required.
Medigap Policies
To eliminate the confusion surrounding the many different types of Medicare supplement policies available, federal law mandates national standardization of Medigap policies. The law requires that insurers offer a limited number of standardized Medigap plans developed by the NAIC. Currently, the available plans are A, B, C, D, F, G, K, L, M, and N. Plans E, H, I, and J have been eliminated. In addition, Plans C and F are not available to individuals who became newly eligible for Medicare on or after January 1, 2020. Plan A includes the “core” benefits (Parts A and B co-payments, 365 additional days of hospitalization, and the first 3 pints of blood). If an insurer sells any Medigap policies in the state, it must offer Plan A. A Buyer’s Guide and an Outline of Coverage are delivered at time of application, prior to accepting any premium payment…
Duties of the Commissioner of Insurance
The Colorado Commissioner of Insurance is a state executive position in the Colorado state government. The commissioner heads the Colorado Division of Insurance, a part of the state’s Department of Regulatory Agencies. The division regulates the state’s insurance industries, deals with customer complaints against insurers and provides other customer services.
The Commissioner is appointed by the Governor and must be confirmed by a majority vote of the state Senate. The Commissioner serves at the Governor’s pleasure and does not have a fixed term.
The Commissioner is responsible for establishing and enforcing regulations in the Colorado insurance market in a manner that protects consumers and encourages economic development.
Those Duties Include:
Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, their findings and supporting documents will be forwarded to the state attorney general to pursue prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Audit the books and records of all Domestic insurers at least every 3 years.
Audit the books and records of any resident producer as frequently as necessary.
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.
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.
Being found guilty of a violation or noncompliance of insurance regulations and laws…
Committing fraud while attempting to obtain an insurance license.
Commingling policy owners’, insurers’, and beneficiaries’ money with the producer’s own money.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been found guilty of a felony (or misdemeanor involving activities related to the individual’s moral character.)
Having been convicted of violations in reference to unfair trade practices 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.
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.
Cease and Desist
If the Commissioner believes that a producer has (or is about to) violate any insurance regulation in Colorado they may issue a cease and desist order. The recipient of a cease and desist order has not had his/her registration suspended or revoked, but is required to stop or limit the activity addresses in the order.
Hearing
While the recipient of a cease and desist order must comply immediately, actions taken by the Commissioner are not “final and binding”. Any Colorado resident producer being subjected to disciplinary action has the right to request a hearing to discuss the merits of the situation.
Likewise, the Commissioner has the authority to conduct an investigation into any producer doing business in Colorado to determine if a hearing is required. Upon finding sufficient evidence, the Commissioner will issue a notice with the date and time of the hearing which will be sent to interested parties at least 20 days prior to the hearing.
If a hearing results in the finding of a known violation of Colorado insurance law, the Commissioner may, in addition to the issuance of a cease and desist order, impose a civil penalty of up to $15,000 per violation.
Unfair Claims Settlement Practices
The intentional obstruction and delay of claims payment or the delay of a claims investigation is a violation of the regulation.
Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.
Failure to provide claims without launching a thorough investigation is a violation of the regulation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of the regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle a claim for less than fair market value.
Policy Forms
Colorado is a “file and use” state. A File and Use filing is a submission that just has to be filed with the Department but the insurer can begin using it as soon as they file it. They do not have to wait for an approval from the Department before using it. A File and Use filing does not mean that the company can submit anything they want to; the submission still has to be in compliance with the Law, Regulations and Bulletins.
If the wording on a health insurance policy (or other form) conflicts with Colorado state law, the policy will be amended to minimum conformity with state statutes.
The amount of interest that may be charged on a life insurance policy loan is also regulated by state law, and policy provisions must comply with these statutory limits.
Record Maintenance
Complete and accurate records must be kept at the producer’s place of business for a minimum of 3 years. 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 given point in time by the Division of Insurance or any representative appointed on their behalf.
Fraudulent Producer Representation
An insurance producer who represents to the public that he/she is 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 using advertisements, letterheads, circulars, business cards, and other methods of representation are included in the definition of impersonating a licensed producer.
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.
Misrepresentation
Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information with the sole purpose of inducing lapse, exchange, conversion, forfeiture, or surrender is a violation as well (twisting).
False Advertising
Communication involving the publication of newspapers, magazines, radio, or television that is intended to deliver false information in reference to insurance is a violation of NAIC regulation.
Defamation
The intentional and malicious circulation of written or oral information intended for the direct or indirect dissemination of derogatory statements is prohibited.
Publishing and circulating inaccurate information regarding the financial condition of an insurer, person, or competitor in the insurance industry is a violation of NAIC regulation.
Boycott, Coercion and Intimidation
The participation in any boycott or activity involving coercion and intimidation for the sole purpose of retaining business or that results in the monopoly of insurance business is prohibited.
False Financial Statements
Any licensed producer who makes false statements containing any information that involves inaccurate material facts or false statements on an application for insurance is in violation of NAIC regulation.
Illegal Inducements
In Colorado, it is prohibited to induce the purchase of insurance by offering anything with a monetary value in excess of $10. It is also prohibited to accept anything with a monetary value in excess of $10 from a client. Any producer participating in this activity will be subject to suspension of his/her license and a monetary fine.
Unfair Discrimination
Discriminating on the basis of class, race, marital status or sexual preference is a violation of regulation. Any unfair discriminatory practices intended to directly or indirectly favor an applicant or insured is prohibited. Denying insurance coverage based on the blindness or partial blindness of an individual is considered discrimination and is a violation of NAIC regulation.
Errors and Admissions
Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.
Children Covered as Dependents
Newborn children must be covered as a dependent from the moment of birth by their parents’ policy. Adopted children (even unborn) are covered by the adoptive parent’s policy from the moment the adoption becomes legal. The newborn or newly adopted child may be enrolled within 30 days without any pre-existing condition limitations.
A dependent child may remain on a parent’s policy until age 26, regardless of student status. However, a mentally or physically handicapped child (any age) can be covered as a dependent on his/her parents’ policy until he/she becomes self-supporting.
Rebating
Colorado licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.
Furthermore, producers in Colorado are also prohibited from receiving any payment for the sale, solicitation or negotiation of insurance outside of commissions and/or salary.
Sharing Commission
The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split.
Twisting
Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited.
Unfair Marketing Practices
The Division of Insurance is responsible for establishing minimum standards for the full and fair disclosure of policy content. They also require the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:
Any implication that policies are approved or that the financial condition of a company is endorsed by any government agency or by any independent group, individual, organization, or society.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.
Gramm-Leach Bliley Act (GLBA)
This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.
McCarran-Ferguson Act
Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation.
National Association of Insurance Commissioners (NAIC)
The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Fair Credit Reporting Act of 1971
The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies collect, share, and use personal data. It applies to insurance underwriting when insurers obtain consumer reports such as credit history, MIB files, or investigative consumer reports.
If an insurer takes adverse action, such as denying coverage or charging higher premiums, based on a consumer report, the applicant must be notified within 3 business days. The applicant then has 60 calendar days to request a copy of the report and dispute any incorrect or incomplete information.
Privacy Act of 1974
The Privacy Act of 1974 is a federal law that regulates how U.S. government agencies handle personal information. It applies only to federal agencies, not to private insurance companies.
When an applicant signs an insurance application, they typically give consent for the insurer to access consumer reports such as MIB files, credit reports, and investigative consumer reports. This process is regulated by the Fair Credit Reporting Act, not the Privacy Act.
A signed application generally authorizes the insurer to access this information for up to 30 months. If the report is not obtained within that time, a new authorization must be secured. This rule comes from the Fair Credit Reporting Act.
Telemarketing
The DO NOT CALL registry is a list of telephone numbers, and the DO NOT CALL registry is intended to prevent calls from telemarketers. Unsolicited sales calls must be made in accordance with the following provisions:
No call may be placed outside of the hours of 8 am to 9 pm local time where the call is received.
The sales nature of the call must be disclosed and the nature of the product/service being offered must be disclosed.
The caller must identify themselves and the broker/dealer they represent.
If a prize is being offered, the prize cannot be contingent on purchase.
CAN-Spam
When an unsolicited e-mail is sent the sender must:
Use the word advertisement or the letters ADV on the subject line.
Notate the physical location from where the email originated.
Give the recipient the opportunity to opt out of ever receiving another email from the sender.
Health First Colorado
Health First Colorado (Colorado’s Medicaid program) is free or low-cost health care for Colorado children and adults who qualify. Since 2016, Colorado Medicaid has been called Health First Colorado. For the purpose of the exam, Medicaid and Health First Colorado are interchangeable terms.
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