State RegulationsCO specificDifficulty 2/5
Over a 12-month period, a Denver producer writes policies almost entirely on the lives of himself, his family members, and his business associates, so that controlled-business premiums exceed everything else he writes. What is the consequence under C.R.S. 10-2-401?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under C.R.S. 10-2-401(4) and (5), when controlled-business premiums exceed the premiums on all other business during a 12-month period, the license is deemed misused, and the Colorado Division of Insurance may proceed against the producer. The consequence is defined by the statute, not by voluntary curtailment of sales.
Why the other options are wrong
- B) The statute does not exempt family and associate coverage; exceeding the other-business aggregate triggers the misuse determination.
- C) The producer, the licensee whose premium mix the statute measures, is the party exposed to action.
- D) There is no statutory one-year curtailment remedy; the consequence is the license-misuse finding itself.
Memory hook
Cross 12 months with more own than others - the license is on the line.