State RegulationsCO specificDifficulty 2/5
During a 12-month period, a Colorado producer's aggregate premiums on policies covering the producer's own family and businesses exceed the aggregate premiums on all of the producer's other business. Under C.R.S. § 10-2-401, what is the consequence?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-2-401(4) and (5) provide that a license is deemed misused if, during any 12-month period, aggregate premiums on the licensee's controlled business exceed aggregate premiums on all other business of the licensee. The rule exists so a Colorado license is used for genuine public sales rather than as a private channel for the producer's own insurance needs. A producer whose own-family and own-business volume starts to approach half of total premium needs to broaden the book or risk the misuse finding.
Why the other options are wrong
- A) Full collection and remittance does not cure the problem; the imbalance in the premium mix itself is what constitutes misuse.
- C) The statutory consequence is the license being deemed misused, not a refund of commissions.
- D) There is no automatic conversion to a limited license under § 10-2-401.
Memory hook
Mostly selling to yourself for 12 months? The license is deemed misused.