State RegulationsCO specificDifficulty 1/5
Under Colorado law, how is an entity that transacts insurance in Colorado without authorization from the Division of Insurance classified?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Title 10 provisions on unauthorized entities, beginning at C.R.S. 10-3-903 and continuing through 10-3-904.5, treat an entity that transacts insurance without Colorado Division of Insurance authority as an unauthorized entity, and its insurance activity in this state is unlawful. The Colorado examination expects producers to recognize and avoid such entities.
Why the other options are wrong
- A) Surplus lines coverage may only be placed through authorized channels by a producer holding an active Property and Casualty license, not by an entity with no Division authority.
- B) Nonresident licensing works by reciprocity for properly licensed individuals and entities; it does not make unlicensed activity lawful.
- D) A self-insured characterization does not remove an entity from Colorado regulation; unauthorized transacting is still unlawful.
Memory hook
Unauthorized means unlawful - no Colorado authority, no Colorado insurance.