At a hearing, the Colorado Division of Insurance establishes that an insurer knew, or reasonably should have known, that its conduct violated the unfair-competition statute. Under C.R.S. § 10-3-1108, what monetary penalty may the Commissioner impose?

Why D is correct

C.R.S. § 10-3-1108(1)(a) escalates the penalty when the violator is an insurer that knew or reasonably should have known it was violating the unfair-competition provisions: not more than $30,000 per act, capped at $750,000 annually. The Commissioner may also order suspension or revocation and payment of the contractual claim the violation caused to go unpaid. The ordinary $3,000-per-act figure applies when knowledge is not shown.

Why the other options are wrong

• A) The $3,000-per-act, $30,000-aggregate penalty applies to violations where knowledge is not shown, not to a knowing insurer.
• B) $10,000 per act is the C.R.S. § 10-3-1109 penalty for violating an existing cease and desist order, not the knowing-insurer penalty under C.R.S. § 10-3-1108.
• C) $500 per act is the C.R.S. § 10-3-1109 penalty for an individual who violates an existing order; it does not fit a knowing insurer.

Memory hook

Knew or should have known? Then $30,000 per act and $750,000 a year.