A Colorado producer writes most of his premium on close family members and on employees of his own company. Under C.R.S. § 10-2-401(4) and (5), his producer license is deemed misused if, during any 12-month period:

Why B is correct

C.R.S. § 10-2-401(4) and (5) treat a license as misused when, during any 12-month period, the aggregate premiums on controlled business exceed the aggregate premiums on all other business of the licensee. Some controlled business is lawful in Colorado; letting it dominate the book is what triggers the misuse finding by the Commissioner.

Why the other options are wrong

• A) Controlled business is not banned outright; only the excess over all other business triggers the misuse finding.
• C) The violation occurs when controlled business is greater than, not smaller than, the rest of the book.
• D) Collecting commission on lawful controlled business is not itself the misuse trigger; the premium comparison is.

Memory hook

Self-business may not out-sell everything else in 12 months.

Why B is correct

C.R.S. § 10-2-401(4) and (5) treat the license as misused when, during any 12-month period, the aggregate premium on controlled business exceeds the aggregate premium on all of the licensee's other business. Writing controlled business is lawful in Colorado; the statute polices only the proportion, measured over a 12-month span.

Why the other options are wrong

• A) Controlled business is permitted; only the statutory premium proportion, not its mere existence, triggers misuse.
• C) The test is whether controlled-business premiums exceed all other premiums, not a fixed 85% ratio.
• D) The measurement period is 12 months, not 24 months, under C.R.S. § 10-2-401(4) and (5).

Memory hook

Controlled business must stay the minority over 12 months.

Why D is correct

C.R.S. § 10-2-401(4) and (5) treat a license as misused when, during any 12-month period, the aggregate premiums on controlled business exceed the aggregate premiums on all other business of the licensee. Writing predominantly for oneself, family members, and employees signals that the license is being used for the licensee's own benefit rather than for the insuring public.

Why the other options are wrong

• A) The consequence under C.R.S. § 10-2-401 is that the license is deemed misused, not a required refund of commissions.
• B) C.R.S. § 10-2-401 does not convert the license into a limited license; the license is deemed misused.
• C) Even legitimate policies create a misuse problem when controlled-business premiums exceed all other premiums over a 12-month period.

Memory hook

More business for yourself than for others? License misuse.

Why B is correct

Under C.R.S. § 10-2-401(4),(5), a Colorado producer's license is deemed misused if, during any 12-month period, the aggregate premiums on controlled business — such as policies on the producer's spouse or own business — exceed the aggregate premiums on all other business of the licensee. The statute targets producers who use the license mainly for their own accounts.

Why the other options are wrong

• A) The statute does not order surrender of commissions; the consequence is that the license is deemed misused.
• C) Family and business relationships do not exempt the producer from the controlled-business limits.
• D) Cancellation of the producer's other policies is not the statutory consequence of exceeding the controlled-business share.

Memory hook

Family business beating the book? License deemed misused.