State RegulationsCO specificDifficulty 3/5
Under C.R.S. § 10-2-702, which situation is an exception to the rule that commissions may be paid only to duly licensed producers?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
C.R.S. § 10-2-702 excepts renewal or deferred commissions paid to persons entitled to receive them (who were licensed when the business was written), commissions assigned to the producer's own partnership or corporation, and payments to entities that do not sell, solicit, or negotiate. The exceptions preserve earned compensation without rewarding new unlicensed sales activity.
Why the other options are wrong
- B) A first-year commission for a referral to an unlicensed person pays for unlicensed selling activity, which is the core conduct C.R.S. § 10-2-702 forbids.
- C) A service fee for negotiating an application is valuable consideration for unlicensed services and falls squarely within the prohibition.
- D) A per-policy bonus to an unlicensed person rewards selling, soliciting, or negotiating, so no exception applies.
Memory hook
Old licensed business can keep paying out; new unlicensed selling never does.