Colorado Property & Casualty Insurance License Exam — All Questions
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2 questions
Colorado Market Conduct & Ethics
A Colorado producer offers a prospect part of the producer's own commission in cash to induce the purchase of a policy. This practice is:
- a.Prohibited as unlawful rebating under the state's unfair trade practices law✓
- b.Permitted for personal auto policies only
- c.Required to be reported but otherwise lawful
- d.Permitted if the producer discloses it to the insurer
Rebating — giving any part of the premium or commission, or other valuable consideration, to induce a purchase — is prohibited under Colorado's unfair trade practices law because it can create unfair discrimination between similar policyholders.
Colorado Market Conduct & Ethics
Premiums a Colorado producer collects from clients before remitting them to the insurer are:
- a.The producer's personal income as soon as they are received
- b.Exempt from any trust-accounting requirement
- c.Held in a fiduciary capacity and must not be commingled or converted for personal use✓
- d.Automatically forfeited to the state guaranty association
Colorado, like other states, treats collected premiums as fiduciary funds belonging to the insurer or the insured. Commingling or converting them is grounds for license discipline and can be a crime; accurate trust accounting is required.