Colorado Division of Insurance and the Commissioner | Colorado Legal Concepts and Regulations | Colorado Ethics

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.

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 the 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

License Suspension and Revocation

Ref: 10-2-401; 10-2-801 through 804; 10-3-904.6; 10-3-904.7; 10-3-1108

A producer’s license may be suspended, revoked, or refused if the Commissioner finds that the individual:

Provided false information on a license application
Violated any insurance statute or regulation
Was convicted of a felony involving dishonesty or breach of trust
Engaged in fraud, misrepresentation, or unfair practices
Misused fiduciary funds or commingled client money with personal funds

The Commissioner must provide notice and an opportunity for a hearing before revoking a license. Reinstatement may be possible after a specified period if the producer demonstrates rehabilitation and compliance.

Records and Requests for Information

Ref: 1-1-7; 1-1-8

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. Failure to comply may result in administrative penalties or disciplinary action.

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.

Payment and Acceptance of Commissions or Fees

Ref: 10-2-401; 10-2-702; Reg. 1-2-9

Only licensed producers may receive commissions or fees for the sale of insurance. Unlicensed individuals cannot legally share in commissions. 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

To qualify for a license, candidates must complete pre-licensing education and pass the state licensing exam. Once licensed, producers must complete continuing education (CE) to maintain competence:

24 hours of CE required every two years, including
- 3 hours of ethics
- 18 hours of general coursework relevant to the line of authority Failure to meet CE requirements can result in nonrenewal or suspension of the license.

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. Producers must ensure that the insurer is properly authorized to conduct business in Colorado. Violations can result in severe penalties, including restitution and license revocation.

Summary

This chapter has explored the legal foundation of the Colorado insurance industry, as established by Title 10 of the Colorado Revised Statutes (C.R.S.) and supporting DOI regulations. Together, these laws define how insurance is conducted, who may sell or service it, and how the state protects consumers through oversight and enforcement.

You learned about the powers and duties of the Commissioner of Insurance, including the authority to investigate, conduct hearings, impose penalties, and suspend or revoke licenses for misconduct. The Commissioner’s role ensures a fair, transparent, and stable insurance market in which both consumers and companies are held accountable.

The chapter also covered licensing requirements—who must be licensed, continuing education standards, and restrictions on commissions, rebating, and controlled business. In addition, you reviewed rules concerning fiduciary responsibilities, such as handling premiums and avoiding commingling of funds, and the Unfair Competition and Deceptive Practices Act (C.R.S. 10-3-1104), which prohibits misrepresentation, coercion, discrimination, and unfair claims practices.

Finally, we examined the importance of unauthorized insurer laws, which protect the public from unregulated or fraudulent entities that operate outside the Commissioner’s authority.

Key points

The Commissioner of Insurance enforces state insurance laws and regulates licensing, solvency, and consumer protection.
A producer’s license is required for anyone selling, soliciting, or negotiating insurance for compensation in Colorado.
Fiduciary duties require that producers hold client funds in trust and never commingle or misuse them.
Unfair trade practices such as misrepresentation, rebating, and defamation can result in fines, license revocation, or criminal penalties.
Understanding and following Colorado insurance statutes ensures professional integrity, legal compliance, and client trust.

Sidenote

Exam Preparation Tip

Expect exam questions that ask you to apply the law rather than simply recall it. For instance, instead of naming a statute, you may be asked how a producer should handle premiums, respond to a DOI investigation, or recognize an unfair claim practice. Focus on understanding intent and impact, not just memorizing code numbers.