A business owner in Aurora asks licensed producer Ryan Tallow to place its employee benefit plan with an insurer that holds no Colorado license from the Division of Insurance. What should Ryan do?

Why B is correct

C.R.S. 10-3-903 and the related unauthorized-entity provisions continuing through 10-3-904.5 prohibit transacting insurance in Colorado without Division of Insurance authority. A producer who places business with an unauthorized entity participates in unlawful activity; the placement must not be made, and the Division is the body that determines whether an entity is authorized to transact insurance.

Why the other options are wrong

• A) Out-of-state licensure does not authorize an insurer to transact business in Colorado; Division of Insurance authorization is required.
• C) A private waiver cannot cure the lack of statutory authority; the prohibition is imposed by statute, not by contract.
• D) Reporting after the fact does not authorize the placement; the transaction itself with an unauthorized entity is prohibited.

Memory hook

No Colorado license, no Colorado sale - check Division authority first.

Why B is correct

Under part 9 of article 3 of title 10, including C.R.S. § 10-3-903, insurance business in Colorado may be transacted only by entities authorized by the Colorado Division of Insurance through properly licensed producers. Placing coverage with an unauthorized entity is a prohibited transaction and exposes both the entity and the producer to enforcement action by the Division, regardless of any waiver the insured might sign.

Why the other options are wrong

• A) An insured's waiver cannot cure a violation of the unauthorized-entity prohibitions; the statute protects the regulatory system, not just the individual insured.
• C) Direct payment of premium does not legalize the transaction; the prohibition reaches the placement itself, not merely the flow of money.
• D) Colorado draws no commercial-versus-personal exception to the requirement that insurance be transacted through authorized entities.

Memory hook

No Colorado license, no Colorado sale — waivers and wire transfers change nothing.