A Colorado insurer knowingly, or reasonably should have known it was, violating the unfair-claims-settlement provisions. After a hearing, what is the maximum penalty the Commissioner may impose under C.R.S. § 10-3-1108?

Why C is correct

C.R.S. § 10-3-1108(1)(a) raises the per-act penalty to not more than $30,000 and imposes an annual cap of $750,000 when the person is an insurer that knew, or reasonably should have known, it was violating part 11. The Commissioner of Insurance may also order suspension or revocation of the license and payment of the contractual claim the violation left unpaid.

Why the other options are wrong

• A) $3,000 per act with a $30,000 aggregate cap is the penalty for a general part 11 violation, not for a knowing insurer.
• B) $10,000 per act belongs to C.R.S. § 10-3-1109 for violating an existing cease and desist order, and no $30,000 aggregate cap applies to a knowing insurer.
• D) $500 per act is the individual cap under C.R.S. § 10-3-1109 for violating an existing order, a different violation and a different statute.

Memory hook

Knowing insurer: thirty per act, seven-fifty a year.