State RegulationsCO specificDifficulty 1/5
A producer in Colorado Springs deposits premiums collected from several policyholders into the same bank account as his personal savings. Under C.R.S. § 10-2-704, what is the problem with this practice?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-2-704(3) prohibits a licensee from commingling premium funds with personal funds. Because premiums are held in a fiduciary capacity under C.R.S. § 10-2-704(1), the money belongs to the insurance transaction — not to the producer — so it must be kept separate from the producer's own accounts.
Why the other options are wrong
- A) Eventual remittance does not cure the violation; the commingling itself is prohibited by C.R.S. § 10-2-704(3).
- B) Paying interest back to policyholders does not authorize commingling under C.R.S. § 10-2-704(3).
- D) The fiduciary duty runs to every licensee, so the producer — not only the insurer — is subject to discipline for commingling.
Memory hook
Fiduciary funds stay in their own lane — never mix with personal money.