After a hearing, the Colorado Commissioner of Insurance finds that a producer engaged in unfair methods of competition and issues a cease and desist order. Under C.R.S. § 10-3-1108, what monetary penalty may be imposed for this violation?

Why A is correct

Under C.R.S. § 10-3-1108(1)(a), a violation of the unfair-competition provisions established after a hearing under C.R.S. § 10-3-1107 draws a penalty of not more than $3,000 per act, capped at $30,000 in the aggregate. The elevated $30,000-per-act and $750,000-annual figures apply only when the violator is an insurer that knew or reasonably should have known it was violating the statute, and the $10,000 and $500 figures belong to C.R.S. § 10-3-1109, which penalizes violating an existing order.

Why the other options are wrong

• B) The $10,000-per-act figure comes from C.R.S. § 10-3-1109, which penalizes violating an existing cease and desist order, not an initial violation under C.R.S. § 10-3-1108.
• C) The $500-per-act penalty applies under C.R.S. § 10-3-1109 to individuals who violate an existing order; a first violation under C.R.S. § 10-3-1108 carries up to $3,000 per act.
• D) The $30,000-per-act and $750,000-annual caps apply only to a knowing insurer under C.R.S. § 10-3-1108(1)(a), not to an ordinary violation.

Memory hook

First order: $3,000 per act, $30,000 cap. Knowing insurer: 10x. Breaking the order: $10,000 insurer, $500 individual.