State RegulationsCO specificDifficulty 1/5
Before an insurance company may transact the business of insurance in Colorado, what must it first obtain?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Colorado's unauthorized-entity provisions (C.R.S. § 10-3-903 through § 10-3-908), no insurer may transact the business of insurance in this state until the Colorado Division of Insurance grants it a certificate of authority. Transacting without that authority exposes the entity, and anyone who aids it, to enforcement action by the Commissioner.
Why the other options are wrong
- B) Insurance is regulated primarily by the states, including Colorado; there is no federal charter that authorizes an insurer to transact business here.
- C) A Secretary of State registration may be needed to form a business entity, but it does not authorize the transaction of insurance in Colorado.
- D) The NAIC is an association of state regulators, not a licensing body; it cannot authorize an insurer to transact business in Colorado.
Memory hook
No certificate of authority, no insurance business in Colorado.