2019 Colorado Revised Statutes
Title 10 - Insurance


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Colorado Revised Statutes 2019 TITLE 10 INSURANCE Cross references: For insurance under the "Uniform Consumer Credit Code Insurance", see article 4 of title 5; for liability insurance for state and county employees, see article 14 of title 24; for requirements for companies writing compensation insurance, see article 44 of title 8; for professional liability insurance for professional service corporations for the practice of law, see C.R.C.P. 265. Law reviews: For article, "Declaratory Judgment Actions to Resolve Insurance Coverage Questions", see 18 Colo. Law. 2299 (1989); for discussion of Tenth Circuit decisions dealing with insurance law, see 66 Den. U. L. Rev. 775 (1989); for discussion of Tenth Circuit decisions dealing with insurance law, see 67 Den. U. L. Rev. 747 (1990). GENERAL PROVISIONS ARTICLE 1 General Provisions Editor's note: This article was repealed in 2002 and was subsequently recreated and reenacted in 2003, resulting in the addition, relocation, and elimination of sections as well as subject matter. For amendments to this article prior to 2002, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume. Former C.R.S. section numbers are shown in editor's notes following those sections that were relocated. PART 1 GENERAL PROVISIONS 10-1-101. Legislative declaration. The general assembly finds and declares that the purpose of this title is to promote the public welfare by regulating insurance to the end that insurance rates shall not be excessive, inadequate, or unfairly discriminatory, to give consumers thereof the greatest choice of policies at the most reasonable cost possible, to permit and encourage open competition between insurers on a sound financial basis, and to avoid regulation of insurance rates except under circumstances specifically authorized under the provisions of this title. Such policy requires that all persons having to do with insurance services to the public be at all times actuated by good faith in everything pertaining thereto, abstain from deceptive or Colorado Revised Statutes 2019 Page 1 of 943 Uncertified Printout misleading practices, and keep, observe, and practice the principles of law and equity in all matters pertaining to such business. Source: L. 2003: Entire article RC&RE, p. 587, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-101 as it existed prior to 2002. 10-1-102. Definitions. As used in this title, unless the context otherwise requires: (1) "Actuary" means a person designated by the commissioner as a qualified actuary based on requirements set forth in rules promulgated by the commissioner. (2) "Admitted assets" includes the investments that are admitted assets of a domestic company under parts 1 and 2 of article 3 and part 4 of article 7 of this title and, in addition thereto, includes: (a) Those assets defined as admitted by nationally recognized insurance statutory accounting principles; and (b) Other assets deemed by the commissioner to be available for the payment of losses and claims, at values to be determined by the commissioner. (3) "Admitted company" or "authorized company" designates companies duly qualified and licensed to transact business in this state, under the provisions of this title. "Nonadmitted companies" or "unauthorized companies" designates companies not licensed to transact business in this state, under the provisions of this title (except article 15) and article 14 of title 24, C.R.S. (3.5) "Bail insurance company" means an insurer engaged in the business of writing bail bonds through bonding agents and subject to regulation by the division. (3.7) "Bail recovery" means actions taken by a person other than a peace officer to apprehend an individual or take an individual into custody because of the individual's failure to comply with bail conditions. (4) "Charitable gift annuity" means an annuity that: (a) Meets the definition and standards contained in section 501 (m)(5) of the federal "Internal Revenue Code of 1986", as amended; (b) Contains on its face the following statement: "This annuity is not issued by an insurance company nor regulated by the Colorado division of insurance and is not protected by any state guaranty fund or protective association." (c) Is issued or guaranteed by an organization that at all times during the three years preceding the date of the issuance of such annuity: (I) Was qualified to receive contributions described in section 170 (c) of the federal "Internal Revenue Code of 1986", as amended; and (II) If required as a condition of such qualification by provisions of the federal "Internal Revenue Code of 1986", as amended, was in receipt of notification from the federal internal revenue service that such organization was so qualified. (5) "Commissioner" or "insurance commissioner" means the commissioner of insurance. (6) (a) "Company", "corporation", "insurance company", or "insurance corporation" includes all corporations, associations, partnerships, or individuals engaged as insurers in the business of insurance, including the attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange, or suretyship except fraternal or benevolent orders and societies. Colorado Revised Statutes 2019 Page 2 of 943 Uncertified Printout (b) "Company", "corporation", "insurance company", or "insurance corporation" does not include health maintenance organizations unless the specific provision of law by its terms applies to health maintenance organizations. (c) For the purposes of a "company", "corporation", or "insurance company", a reciprocal insurer shall be considered a single economic entity. (7) "Division" means the division of insurance. (8) "Domestic" designates those companies incorporated or formed in this state. (9) "Foreign", when used without limitation, includes all those companies formed by authority of any other state or government. (10) "Institution" means any entity including, but not limited to, a corporation, a jointstock company, a limited liability company, an association, a bank, a trust, a partnership, a joint venture, a special district, a government, or a quasi-governmental agency. (11) "Insurable interest in property" means every interest in property or any relation thereto, or liability in respect thereof, of such a nature that a contemplated peril might directly damnify the insured. (12) "Insurance" means a contract whereby one, for consideration, undertakes to indemnify another or to pay a specified or ascertainable amount or benefit upon determinable risk contingencies, and includes annuities. (13) "Insurer" means every person engaged as principal, indemnitor, surety, or contractor in the business of making contracts of insurance. (14) "Motor vehicle rental agreement" means an agreement for the rental of a motor vehicle for transportation purposes, for a period of no more than ninety days, in return for a fee that is calculated on a daily, weekly, or monthly basis. (15) "Motor vehicle rental company" means an entity that is in the business of renting, pursuant to motor vehicle rental agreements, motor vehicles that do not come within the definition of a commercial motor vehicle as set forth in section 42-2-402 (4), C.R.S. (16) "Nonadmitted assets" includes, but is not limited to, those assets defined as nonadmitted by nationally recognized insurance statutory accounting principles. Nonadmitted assets shall not be taken into account in determining the financial condition of a company. (17) (a) "Qualified United States financial institution" means an institution that is: (I) Organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or any state thereof; and (II) Regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, trust companies, or savings and loan associations. (b) If any qualified United States financial institution issues letters of credit, such institution shall have been determined by either the commissioner or the securities valuation office of the national association of insurance commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner. (c) If any qualified United States financial institution operates a trust, such institution shall be eligible to operate as a fiduciary of a trust and shall have been granted authority to operate with fiduciary powers. (18) "Real estate" and "real property" include fee simple and leasehold estates therein. (19) "Transact" as applied to insurance means and includes any of the following: (a) Solicitation and inducement; Colorado Revised Statutes 2019 Page 3 of 943 Uncertified Printout (b) Negotiations preliminary to effectuation of a contract of insurance; (c) Execution of a contract of insurance; (d) Transaction of matters subsequent to effectuation of a contract of insurance and arising out of the contract obligations. Source: L. 2003: Entire article RC&RE, p. 587, § 1, effective July 1. L. 2004: (3) amended, p. 897, § 5, effective May 21. L. 2012: (3) amended and (3.5) and (3.7) added, (HB 12-1266), ch. 280, p. 1491, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-102 as it existed prior to 2002. 10-1-103. Division of insurance - subject to repeal - repeal of functions. (1) There is established a division of insurance within the department of regulatory agencies. This division is charged with the execution of the laws relating to insurance, and has a supervising authority over the business of insurance in this state. Offices of the division of insurance shall be provided in the capitol buildings group at Denver, Colorado. Whenever any law of this state refers to the insurance department of the state of Colorado, said law shall be construed as referring to the division of insurance. (2) The commissioner of insurance, before incurring any expense for his or her office and the maintenance thereof, exclusive of salaries and wages, shall make requisition therefor upon and receive the approval of the executive director of the department of personnel as required by law. (3) All direct and indirect expenditures of the division are paid from the division of insurance cash fund, which is hereby created in the state treasury. All fees collected under sections 8-44-204 (7), C.R.S., 8-44-205 (6), C.R.S., 10-2-413, 10-3-108, 10-3-207, 10-3.5-104, 10-3.5-107, 10-12-106, 10-15-103, 10-16-110 (1) and (2), 10-16-111 (1), 10-23-102, 10-23-104, 24-10-115.5 (5), C.R.S., and 29-13-102 (5), C.R.S., not including fees retained under contracts entered into in accordance with section 10-2-402 (5) or 24-34-101, C.R.S., and all taxes collected under section 10-3-209 (4) designated for the division of insurance, are transmitted to the state treasurer, who shall credit the moneys to the division of insurance cash fund. The division shall use all moneys credited to the division of insurance cash fund as provided in this section and in section 24-48.5-106, C.R.S., subject to annual appropriation by the general assembly for the purposes authorized in this title and as otherwise authorized by law. Moneys in the fund do not revert to the general fund or to any other fund. In accordance with section 24-36114, C.R.S., all interest derived from the deposit and investment of moneys in the fund is credited to the general fund. (4) The division of insurance shall adopt a seal with the words "commissioner of insurance of the state of Colorado" and such other design as the commissioner may prescribe engraved thereon, by which it shall authenticate its proceedings, and of which the courts of this state shall take judicial notice. All copies of papers, certified by the commissioner and sealed with the seal of the division, shall have the same force and validity as the originals thereof in any suit or proceeding in any court in this state. (5) The office of the division of insurance is a public office. Except as otherwise provided by law, the documents, materials, and information of the office or on file in the office are public records of this state, and information shall be furnished to anyone applying for the Colorado Revised Statutes 2019 Page 4 of 943 Uncertified Printout information; except that documents, materials, and information provided by the regulatory officials of any state, federal agency, or foreign country and by the national association of insurance commissioners shall be given confidential treatment if such documents, materials, and information are treated as confidential in such other state or foreign country or by such other federal agency or the national association of insurance commissioners. Notwithstanding any provision of this subsection (5) to the contrary, the commissioner or the commissioner's designee may share otherwise confidential documents, materials, and information with regulatory officials of any state, federal agency, or foreign country and with the national association of insurance commissioners if the association or the regulatory official of the other state, federal agency, or foreign country agrees and has the legal authority to maintain the same level of confidentiality as applies to the documents, materials, and information under Colorado law. (6) (a) The provisions of section 24-34-104, C.R.S., concerning the termination schedule for regulatory bodies of this state, unless extended as provided in that section, are applicable to the division of insurance created by this section. (b) (I) (A) Repealed. (B) (Deleted by amendment, L. 2006, p. 75, § 1, effective March 27, 2006.) (B.5) and (C) (Deleted by amendment, L. 2010, (HB 10-1220), ch. 197, p. 849, § 1, effective July 1, 2010.) (D) Except as otherwise provided in section 24-34-104 (31)(a)(I), the functions of the division of insurance are repealed, effective September 1, 2030, pursuant to this section and section 24-34-104. (E) (Deleted by amendment, L. 2010, (HB 10-1220), ch. 197, p. 849, § 1, effective July 1, 2010.) (II) Prior to such repeal, the division of insurance shall be reviewed as provided for in section 24-34-104, C.R.S. Source: L. 2003: Entire article RC&RE, p. 590, § 1, effective July 1. L. 2004: (3) amended, p. 1253, § 2, effective May 27. L. 2005: (6) amended, p. 761, § 11, effective June 1. L. 2006: (6)(b)(I)(B) and (6)(b)(I)(D) amended and (6)(b)(I)(B.5) and (6)(b)(I)(E) added, p. 75, § 1, effective March 27; (5) amended, p. 959, § 2, effective January 1, 2007. L. 2007: (6)(b)(I)(B.5) amended, p. 339, § 1, effective July 1. L. 2008: (6)(b)(I)(C) amended, p. 209, § 1, effective March 26. L. 2010: (6)(b)(I)(A), (6)(b)(I)(B.5), (6)(b)(I)(C), (6)(b)(I)(D), and (6)(b)(I)(E) amended, (HB 10-1220), ch. 197, p. 849, § 1, effective July 1. L. 2012: (3) and (6)(b)(I)(D) amended and (6)(b)(I)(A) repealed, (HB 12-1266), ch. 280, p. 1491, § 2, effective July 1. L. 2016: (6)(b)(I)(D) amended, (HB 16-1192), ch. 83, p. 232, § 5, effective April 14. L. 2017: (6)(b)(I)(D) amended, (SB 17-249), ch. 283, p. 1544, § 2, effective June 1; (5) amended, (HB 17-1231), ch. 284, p. 1575, § 14, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-103 as it existed prior to 2002. Cross references: For the legislative declaration contained in the 2006 act amending subsection (5), see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-104. Commissioner of insurance - other employees. (1) The commissioner of insurance is the head of the division of insurance. The commissioner shall be appointed by, and Colorado Revised Statutes 2019 Page 5 of 943 Uncertified Printout serve at the pleasure of, the governor, subject to confirmation of the appointment by the senate pursuant to section 23 of article IV of the state constitution. The commissioner shall be a person well versed in insurance, and an elector of the state of Colorado, and shall have no pecuniary interest in any insurance company or agency directly or indirectly other than as a policyholder. (2) The commissioner shall have such employees as may be required for the transaction of the business of the office of the commissioner. One or more shall be deputy commissioners of insurance who are authorized in all matters to act as and for the commissioner of insurance in the absence of the commissioner. Examiners shall be classified as senior and junior. A senior examiner shall have had three full years' experience in the examination of insurance companies as an employee of a state insurance department. The salary and term of office of the commissioner and the employees of the division shall be fixed pursuant to section 13 of article XII of the state constitution. Source: L. 2003: Entire article RC&RE, p. 592, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-104 as it existed prior to 2002. 10-1-105. Actuary. The commissioner may maintain in the division an actuary who is experienced, skilled, and fully competent to perform the actuarial duties of the division and to assist in or take charge of examinations of insurance companies under the general direction of the commissioner. Source: L. 2003: Entire article RC&RE, p. 592, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-106 as it existed prior to 2002. Cross references: For the oath required of an actuary, see § 10-1-106. 10-1-106. Oath required of insurance commissioner and actuary. The commissioner and the actuary, before entering upon their duties, shall take and subscribe to the oath required by the constitution of Colorado, which oath shall be filed in the office of the secretary of state. Source: L. 2003: Entire article RC&RE, p. 592, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-105 as it existed prior to 2002. Cross references: For the oath of office, see Colo. Const., art. XII, § 8. 10-1-107. Personal fees prohibited. Neither the commissioner nor any of the commissioner's employees shall be directly or indirectly employed by any insurance company, association, or society, in any capacity, or be directly or indirectly interested in any such insurance corporation, except as a policyholder; nor shall they or any of them charge any such insurance corporation or official any fee or take any valuable thing in payment for any service or otherwise, unless payment for such service is specifically authorized by law. The penalty for violation of this section shall be removal from office. Colorado Revised Statutes 2019 Page 6 of 943 Uncertified Printout Source: L. 2003: Entire article RC&RE, p. 592, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-107 as it existed prior to 2002. Cross references: For the official fees to be paid by insurance companies, see § 10-3207. 10-1-108. Duties of commissioner - reports - publications - fees - disposition of funds - adoption of rules - examinations and investigations. (1) It is the duty of the commissioner to: (a) File in offices of the division, and safely keep, all books and papers required by law to be filed therein and to keep and preserve in permanent form a full record of the commissioner's proceedings, including a concise statement of the condition of such insurance companies reported to or examined by the commissioner; (b) Issue certificates of authority to transact insurance business to any insurance companies that fully comply with the laws of this state; (c) Issue such other certificates as required by law in the organization of insurance companies and the transaction of the business of insurance; and (d) Generally, do and perform with justice and impartiality all such duties as are or may be imposed on the commissioner by the laws in relation to the business of insurance in this state. (2) The commissioner shall require every domestic insurance company to keep its books, records, accounts, and vouchers in such a manner that the commissioner or the commissioner's authorized representatives may readily verify its annual statements and ascertain whether the company is solvent and has complied with the provisions of law. The commissioner shall annually make a tabular statement and synopsis of the several statements as accepted by the commissioner. (3) The commissioner shall furnish to all insurance companies doing business in this state blanks for the filing of statements as required by law. The commissioner, on retiring from office, shall deliver to his or her qualified successor all furniture, papers, and property pertaining to the commissioner's office. (4) It is the duty of the commissioner to examine all requests and applications for licenses to be issued under the authority of part 4 of article 2 of this title, and the commissioner is authorized to refuse to issue any such licenses until the commissioner is satisfied of the qualifications and general fitness of the applicant in accordance with the requirements of the insurance laws. (5) It is the duty of the commissioner to make such investigations and examinations as are authorized by this title (except article 15) and article 14 of title 24, C.R.S., and to investigate such information as is presented to the commissioner by authority that the commissioner believes to be reliable pertaining to violation of the insurance laws of Colorado, and it is the commissioner's duty to present the result of such investigations and examinations for further investigation and prosecution to either the district attorney of the proper judicial district or the attorney general when, in the commissioner's opinion, such violations justify such action. (6) Any publication circulated in quantity outside the executive branch shall be issued in accordance with the provisions of section 24-1-136, C.R.S. Colorado Revised Statutes 2019 Page 7 of 943 Uncertified Printout (7) (a) It is the duty and responsibility of the commissioner to supervise the business of insurance in this state to assure that it is conducted in accordance with the laws of this state and in such a manner as to protect policyholders and the general public. (b) In complying with this subsection (7), the commissioner shall: (I) Encourage the fair treatment of health care providers, including primary care providers; (II) Encourage policies and developments, including increased investments in primary care, that decrease health disparities and improve the quality, efficiency, and affordability of health care service delivery and outcomes; and (III) View the health care system as a comprehensive entity and encourage and direct health insurers toward policies that advance the welfare of the public through overall efficiency, affordability, improved health care quality, and appropriate access. (8) It is the duty of the commissioner to examine all requests and applications from insurers for certificates of authority to be issued pursuant to section 10-3-105. The commissioner is authorized to refuse to issue any such certificates of authority until the commissioner is reasonably satisfied as to the qualifications and general fitness of the insurer to comply with the requirements of the provisions of this title (except article 15) and article 14 of title 24, C.R.S. (9) It is the duty of the commissioner to transmit all surcharges, costs, taxes, penalties, and fines collected by the division of insurance under any provision of this title (except article 15) and article 14 of title 24, C.R.S., to the department of the treasury. All funds so transmitted shall be credited to the general fund; except that any funds collected by the commissioner as reimbursement for out-of-state travel costs in conjunction with the examination of an insurance company or with an activity to improve regulation of insurance companies are hereby continuously appropriated to the division of insurance in addition to any other funds appropriated for its normal operation. (10) It is the duty of the commissioner to encourage the dissemination to the public of general information concerning insurance by those engaged in the business of insurance, so as to work toward informed choices of insurance needs and options. (11) It is the duty of the commissioner to evaluate insurance policies for long-term care to determine their compliance with the provisions of article 19 of this title and to provide insurance companies with a written statement indicating the results of such determination. (12) It is the duty of the commissioner to oversee the operation of electronic data interchange projects for purposes of uniform billing and electronic data exchange for health benefit coverages in Colorado. In carrying out such duties, the commissioner shall coordinate with the departments of labor and employment, public health and environment, and health care policy and financing, as appropriate. (13) (a) If determined appropriate for purposes of licensure of provider networks and individual providers as provided in section 6-18-302 (1)(b), C.R.S., the commissioner may adopt rules after consultation with providers and other appropriate persons that set forth standards or requirements specific to licensed provider networks or licensed individual providers concerning solvency and operational capacity or the performance of services consistent with the extent of risk being accepted by the licensed provider network or licensed individual provider. (b) In determining the need for and the content of such rules, the commissioner shall take into consideration: Colorado Revised Statutes 2019 Page 8 of 943 Uncertified Printout (I) The differences between licensed provider networks or licensed individual providers and the type, amount, and extent of risk they accept and services they provide as compared with that accepted by traditional sickness and accident insurers, nonprofit hospital, medical-surgical, and health service corporations, and health maintenance organizations; (II) The types of information the commissioner would need to assess a provider network or individual provider's ability to accept and manage risk and monitor material changes in the financial solvency or operational capabilities of a provider network or individual provider; (III) The need to protect consumers, monitor the financial solvency of licensed provider networks and licensed individual providers, and assure the provision of services to consumers, including reasonable access to coverage, according to contractual obligations; and (IV) Whether such rules would give a licensed provider network or licensed individual provider an unreasonable competitive advantage or disadvantage as compared to traditional insurers, nonprofit hospital, medical-surgical, and health service corporations, and health maintenance organizations offering similar products under similar circumstances. (c) The commissioner may also consider whether rates are excessive, inadequate, or unfairly discriminatory. (d) The commissioner may establish a fee to cover the direct and indirect costs of the regulation of provider networks pursuant to the provisions of this subsection (13) and part 3 of article 18 of title 6, C.R.S. Source: L. 2003: Entire article RC&RE, p. 593, § 1, effective July 1. L. 2004: (5), (8), and (9) amended, p. 897, § 6, effective May 21. L. 2012: (5), (8), and (9) amended, (HB 121266), ch. 280, p. 1492, § 3, effective July 1. L. 2019: (7) amended, (HB 19-1233), ch. 194, p. 2121, § 3, effective May 16. Editor's note: This section is similar to former § 10-1-108 as it existed prior to 2002. Cross references: For the legislative declaration in HB 19-1233, see section 1 of chapter 194, Session Laws of Colorado 2019. 10-1-109. Rules of commissioner. (1) The commissioner may establish, and from time to time amend, such reasonable rules as are necessary to enable the commissioner to carry out the commissioner's duties under the laws of the state of Colorado. (2) The commissioner shall adopt rules to ensure that payments to the subsequent injury fund created in section 8-46-101, C.R.S., the workers' compensation cash fund, created in section 8-44-112 (7), C.R.S., the cost containment fund created in section 8-14.5-108, C.R.S., and the major medical insurance fund created in section 8-46-202, C.R.S., from surcharges on premiums paid for policies of workers' compensation insurance that feature deductibles in excess of the limit set forth in section 8-44-111 (1), C.R.S., reflect the value of any reduction in premium achieved through the use of such deductibles. Such rules shall apply only to claims made on policies issued or renewed after the effective date of the rules. In adopting such rules, the commissioner shall determine the most effective method of establishing the value of deductibles in excess of such limits and ensuring that payments reflect such value. Source: L. 2003: Entire article RC&RE, p. 595, § 1, effective July 1. Colorado Revised Statutes 2019 Page 9 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-1-109 as it existed prior to 2002. Cross references: For the rule-making procedures, see article 4 of title 24. 10-1-110. Grounds and procedure for suspension or revocation of certificate or license of entities. (1) The certificate of authority of an insurance company to do business in this state may be revoked or suspended by the commissioner for any reason specified in this title and article 14 of title 24, C.R.S. Specifically, the certificate may be suspended or revoked by the commissioner for reasons that include, but are not limited to: (a) Insolvency or impairment, as defined in section 10-3-212; (b) Failure to meet the requirements of section 10-3-201; (c) Refusal or failure to submit an annual report, as required by section 10-3-109, or any other report required by law or by lawful order of the commissioner; (d) Doing an unauthorized insurance business in another state, as set forth in section 101-117; (e) Failure to comply with the provisions of its own charter or bylaws, if such failure renders its operation hazardous to the public or to its policyholders; (f) Failure to submit to examination or any legal obligation relative thereto; (g) Refusal to pay the cost of examination, as authorized by law; (h) Use of methods that, although not otherwise specifically proscribed by law, nevertheless render its operation hazardous, or its condition unsound, to the public or to its policyholders; (i) Failure to otherwise comply with the law of this state, if such failure renders its operation hazardous to the public or to its policyholders; (j) Use of practices or existence of conditions that render its financial position unsound to the public or its policyholders. (2) If the commissioner finds upon examination, hearing, or other evidence that any foreign or domestic insurance company has committed any of the acts specified in subsection (1) of this section, or any other act specified in this title and article 14 of title 24, C.R.S., for which the penalty is suspension or revocation of the certificate of authority, the commissioner may suspend or revoke such certificate of authority, if he or she deems it in the best interest of the public and the policyholders of the company, notwithstanding any other provision of said references. Notice of any revocation shall be published in one or more daily newspapers in Denver that have a general state circulation. Before suspending or revoking any certificate of authority of an insurance company, the commissioner shall grant the company fifteen days in which to show cause why such action should not be taken. Any final decision of the commissioner to suspend or revoke a certificate of authority or license of any person or entity regulated by the division of insurance shall be subject to judicial review by the court of appeals pursuant to section 24-4-106 (11), C.R.S. (3) If the commissioner suspends the license or certificate of authority of any entity regulated by the division of insurance, such license or certificate may be revoked one year after the date of suspension if the reason for such suspension is not corrected by the entity. The suspension or revocation of a license or certificate of authority of any entity regulated by the division of insurance shall automatically result in the suspension or revocation, as appropriate, of any license of any insurance agent of any such entity. Colorado Revised Statutes 2019 Page 10 of 943 Uncertified Printout (4) If the commissioner finds upon examination or other evidence that any foreign or domestic insurance company has committed any act specified in subsection (1) of this section, the commissioner after notice and hearing may issue an order requiring that the insurance company cease and desist committing such act. If the commissioner believes an emergency exists, the commissioner may enter a cease-and-desist order at once, and a hearing shall be held as soon as practicable. Pending such hearing and decision thereon, the emergency order shall remain in effect subject to the power of the commissioner on the commissioner's own motion or on petition to vacate such order. Source: L. 2003: Entire article RC&RE, p. 596, § 1, effective July 1. L. 2012: IP(1) and (2) amended, (HB 12-1266), ch. 280, p. 1493, § 4, effective July 1. Editor's note: This section is similar to former § 10-1-111 as it existed prior to 2002. 10-1-111. Invoking aid of courts. The commissioner, through the attorney general, may invoke the aid of the courts through injunction or other proper process, mandatory or otherwise, to enforce any proper order made by the commissioner or action taken by the commissioner; but nothing in this title (except article 15) and article 14 of title 24, C.R.S., shall be construed to prevent the company or person affected by any order, ruling, proceeding, act, or action of the commissioner, or any person acting on behalf and at instance of the commissioner, from testing the validity of the same in any court of competent jurisdiction, through injunction, appeal, or other proper process or proceeding, mandatory or otherwise. Source: L. 2003: Entire article RC&RE, p. 597, § 1, effective July 1. L. 2004: Entire section amended, p. 898, § 7, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1493, § 5, effective July 1. Editor's note: This section is similar to former § 10-1-112 as it existed prior to 2002. 10-1-112. Policy conditions required by other states. The policies of a domestic insurance company, when issued or delivered in any other state, territory, district, or country, may contain any provision required by the laws of the state, territory, district, or country in which the same are issued, anything in this title (except article 15) and article 14 of title 24, C.R.S., to the contrary notwithstanding. Source: L. 2003: Entire article RC&RE, p. 597, § 1, effective July 1. L. 2004: Entire section amended, p. 898, § 8, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1493, § 6, effective July 1. Editor's note: This section is similar to former § 10-1-115 as it existed prior to 2002. 10-1-113. No seal required on policies. All policies or contracts made or entered into by any domestic company may be made with or without the seal thereof. The policies or contracts shall be subscribed by the president or such other officers as may be designated by the Colorado Revised Statutes 2019 Page 11 of 943 Uncertified Printout bylaws for that purpose, and shall be attested by the secretary, and, being so subscribed, shall be obligatory upon such company. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-116 as it existed prior to 2002. 10-1-114. Sale of premium notes prohibited. It is unlawful for any insurance company or any agent thereof who has accepted a premium note in payment for a policy of insurance to hypothecate, sell, assign, dispose of, or attempt to collect said note prior to the delivery of said insurance policy to the applicant. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-118 as it existed prior to 2002. 10-1-115. Penalty. If any insurance company or any agent of any such company violates any of the provisions of section 10-1-114, the commissioner has the power and is authorized to revoke the certificate of authority of any company so offending or to cancel the license of any such agent who violates any provisions of section 10-1-114. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-119 as it existed prior to 2002. Cross references: For the revocation of a certificate of authority to do business, see § 10-1-110. 10-1-116. Defamation of other companies. It is unlawful for any insurance company doing business in this state, or any officer, director, clerk, employee, or agent thereof, to make, verbally or otherwise, publish, print, distribute, or circulate, or cause the same to be done, or in any way to aid, abet, or encourage the making, printing, publishing, distributing, or circulating of any pamphlet, circular, article, literature, or statement of any kind that is defamatory of any other insurance company doing business in this state, or licensed to sell its capital stock within this state, that contains any false and malicious criticism or false and malicious statement calculated to injure such company in its reputation or business. Any officer, director, clerk, employee, or agent of any insurance company violating the provisions of this section is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than five hundred dollars, or by imprisonment in the county jail for a term of not more than twelve months, or by both such fine and imprisonment. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-120 as it existed prior to 2002. Colorado Revised Statutes 2019 Page 12 of 943 Uncertified Printout 10-1-117. Company unauthorized in other states. If, upon investigation, the commissioner finds that any insurance company incorporated under the laws of Colorado is doing business in another state or territory without having first procured a license or authority from such state or territory, if any is required, authorizing it to do business therein, the commissioner may revoke the authority of such company to do business in this state. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-121 as it existed prior to 2002. Cross references: For the revocation of a certificate of authority to do business, see § 10-1-110. 10-1-118. Foreign companies - unsatisfied judgments - suspension. (1) If a judgment against a foreign insurance company is unsatisfied, and execution has issued on said judgment, and the return of the sheriff discloses that the sheriff cannot fully satisfy such judgment, the judgment creditor or judgment creditor's attorney may file with the commissioner, in triplicate, a complaint setting forth such facts. The commissioner shall mail a copy of such complaint to the home office of such insurance company, at the address shown in the records of the division of insurance, and a copy to the Colorado office or the Colorado general agent of such insurance company. (2) If said insurance company does not, within thirty days after such mailing, pay and discharge said judgment or show good cause to the commissioner for the failure to pay such judgment, the commissioner, upon satisfactory proof of the allegations of the complaint, shall forthwith suspend the license or right of such insurance company to do business in this state. If good cause, previously shown, ceases to exist and the judgment remains unpaid, the commissioner shall suspend such license or right. (3) The commissioner shall reinstate the license or right to do business in this state when the insurance company has fully paid such judgment. Source: L. 2003: Entire article RC&RE, p. 598, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-122 as it existed prior to 2002. Cross references: For the suspension of a certificate of authority to do business, see § 10-1-110. 10-1-119. Insurance vending machines prohibited. No policy or contract of insurance of any kind shall be sold or dispensed through any mechanical device or vending machine, but this section shall not be construed as to prevent the use of office machines of any type by an insurance company. Insurance shall be sold only by an insurance producer, as defined in section 10-2-103 (6). Source: L. 2003: Entire article RC&RE, p. 599, § 1, effective July 1. Colorado Revised Statutes 2019 Page 13 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-1-123 as it existed prior to 2002. 10-1-120. Reporting of medical malpractice claims. (1) Each insurance company licensed to do business in this state and engaged in the writing of medical malpractice insurance for licensed practitioners shall send to the Colorado medical board, in the form prescribed by the commissioner of insurance, information relating to each medical malpractice claim against a licensed practitioner that is settled or in which judgment is rendered against the insured. (2) The insurance company shall provide such information as is deemed necessary by the Colorado medical board to conduct a further investigation and hearing. Source: L. 2003: Entire article RC&RE, p. 599, § 1, effective July 1. L. 2010: Entire section amended, (HB 10-1260), ch. 403, p. 1977, § 49, effective July 1. Editor's note: This section is similar to former § 10-1-124 as it existed prior to 2002. 10-1-121. Reporting of malpractice claims against physical therapists. (1) Each insurance company licensed to do business in this state and engaged in the writing of malpractice insurance for physical therapists licensed under article 285 of title 12 shall send to the director of the division of professions and occupations, in the department of regulatory agencies, in the form prescribed by the commissioner of insurance, information relating to each claim involving physical therapy malpractice or against any such physical therapist that is settled or in which judgment is rendered against the insured. (2) Every insurance company licensed to do business in this state that makes payment under a policy of insurance in settlement of a claim of physical therapy malpractice, or in satisfaction of a judgment for such malpractice, shall report to the secretary of health and human services, in accordance with 42 U.S.C. secs. 11131 and 11134, the following information: (a) The name of any physical therapist for whose benefit the payment is made; (b) The amount of the payment; (c) The name, if known, of any hospital with which the physical therapist is affiliated or associated; (d) A description of the acts or omissions and injuries or illnesses upon which the action or claim was based; and (e) Such other information as the secretary of health and human services determines is required for appropriate interpretation of the information so reported. Source: L. 2003: Entire article RC&RE, p. 599, § 1, effective July 1. L. 2019: (1) amended, (HB 19-1172), ch. 136, p. 1650, § 29, effective October 1. Editor's note: This section is similar to former § 10-1-124.2 as it existed prior to 2002. 10-1-122. Reporting of malpractice claims against architects. Each insurance company doing business in this state and engaged in the writing of malpractice insurance for architects shall send to the state board of licensure for architects, professional engineers, and professional land surveyors, in the form prescribed by the commissioner, information relating to each malpractice claim against a licensed architect or a corporation, partnership, or group of Colorado Revised Statutes 2019 Page 14 of 943 Uncertified Printout persons practicing architecture that is settled or in which judgment is rendered against the insured within ninety days after the effective date of such settlement or judgment. Source: L. 2003: Entire article RC&RE, p. 600, § 1, effective July 1. L. 2006: Entire section amended, p. 741, § 3, effective July 1. Editor's note: This section is similar to former § 10-1-124.5 as it existed prior to 2002. Cross references: For the provisions concerning architects, see part 3 of article 120 of title 12. 10-1-123. Reporting of claims against plumbers. Each insurance company licensed to do business in this state and engaged in the writing of insurance for plumbers shall send within ninety days to the examining board of plumbers, in the form prescribed by the commissioner, information relating to each malpractice claim against a licensed plumber that is settled or in which judgment is rendered against the insured. Source: L. 2003: Entire article RC&RE, p. 600, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-124.6 as it existed prior to 2002. Cross references: For the provisions concerning plumbers, see article 155 of title 12. 10-1-124. Reporting of podiatric malpractice claims. (1) Each insurance company licensed to do business in this state and engaged in the writing of malpractice insurance for licensed podiatrists shall send to the Colorado podiatry board, in the form prescribed by the commissioner, information relating to each malpractice claim against a licensed podiatrist that is settled or in which judgment is rendered against the insured. (2) Such information shall include any information deemed necessary by the Colorado podiatry board to conduct a further investigation and hearing. Source: L. 2003: Entire article RC&RE, p. 600, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-124.7 as it existed prior to 2002. Cross references: For the provisions concerning podiatrists, see article 290 of title 12. 10-1-125. Reporting of malpractice claims against optometrists. (1) Each insurance company licensed to do business in this state and engaged in the writing of malpractice insurance for optometrists shall send to the state board of optometry, in the form prescribed by the commissioner, information relating to each malpractice claim against a licensed optometrist that is settled or in which judgment is rendered against the insured. (2) Such information shall include any information deemed necessary by the state board of optometry to conduct a further investigation and hearing. Colorado Revised Statutes 2019 Page 15 of 943 Uncertified Printout Source: L. 2003: Entire article RC&RE, p. 601, § 1, effective July 1. L. 2011: Entire section amended, (SB 11-094), ch. 129, p. 450, § 28, effective April 22. Editor's note: This section is similar to former § 10-1-124.9 as it existed prior to 2002. Cross references: For the provisions concerning optometrists, see article 275 of title 12. 10-1-125.5. Reporting of malpractice claims against naturopathic doctors. Each insurance company licensed to do business in this state and engaged in writing malpractice insurance for naturopathic doctors registered under article 250 of title 12 shall send to the director of the division of professions and occupations in the department of regulatory agencies, in the form prescribed by the commissioner, information relating to each malpractice claim against a registered naturopathic doctor that is settled or in which judgment is rendered against the insured naturopathic doctor. The insurance company shall include any information the director determines necessary to enable the director to conduct a further investigation and hearing. Source: L. 2017: Entire section added, (SB 17-106), ch. 302, p. 1649, § 6, effective August 9. L. 2019: Entire section amended, (HB 19-1172), ch. 136, p. 1650, § 30, effective October 1. 10-1-126. Training program for persons working with the aging. The division of insurance shall develop a training program for persons working with the aging on the local level that will enable them to assist the elderly in dealing with their medicare supplemental insurance problems. Source: L. 2003: Entire article RC&RE, p. 601, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-125 as it existed prior to 2002. 10-1-127. Discretionary use of administrative law judges. Whenever the commissioner or the division of insurance pursuant to this title or any other provision of law is obligated or authorized to hold a hearing, the commissioner, at his or her discretion, may designate an employee of the division of insurance who has administrative responsibilities to act as a hearing officer or may use the services of an administrative law judge appointed pursuant to part 10 of article 30 of title 24, C.R.S., to conduct the hearing according to the "State Administrative Procedure Act". Any decision by such a designated hearing officer or appointed administrative law judge shall be an initial decision and, in the absence of an appeal to the division of insurance or a review upon motion of the commissioner as provided in section 24-4105, C.R.S., shall thereupon become the decision of the division of insurance. Any final decision of the commissioner or the division of insurance shall be subject to judicial review by the court of appeals pursuant to section 24-4-106 (11), C.R.S. Source: L. 2003: Entire article RC&RE, p. 601, § 1, effective July 1. Colorado Revised Statutes 2019 Page 16 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-1-126 as it existed prior to 2002. Cross references: For the provisions concerning the "State Administrative Procedure Act", see article 4 of title 24. 10-1-128. Fraudulent insurance acts - immunity for furnishing information relating to suspected insurance fraud - legislative declaration. (1) For purposes of this title 10, articles 40 to 47 of title 8, articles 200, 215, 220, 240, 245, 255, 275, 285, 290, and 300 of title 12, and article 20 of title 44, a fraudulent insurance act is committed if a person knowingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, a purported insurer, or any producer thereof any written statement as part or in support of an application for the issuance or the rating of an insurance policy or a claim for payment or other benefit pursuant to an insurance policy that the person knows to contain false information concerning any fact material thereto or if the person knowingly and with intent to defraud or mislead conceals information concerning any fact material thereto. For purposes of this section, "written statement" includes a patient medical record as such term is defined in section 18-4-412 (2)(a) and any bill for medical services. (2) (a) The general assembly finds and declares that insurance fraud is expensive; that it increases premiums and places businesses at risk; and that it reduces consumers' ability to raise their standards of living and decreases the economic vitality of this state. The general assembly further finds and declares that the state of Colorado must aggressively confront the problem of insurance fraud by facilitating the detection of and reducing the occurrence of fraud through stricter enforcement and deterrence and by encouraging greater cooperation among consumers, the insurance industry, and the state in coordinating efforts to combat insurance fraud. (b) Colorado has addressed insurance fraud in various statutes, including but not limited to the civil and administrative provisions found in this section, part 4 of article 2 of this title, parts 1, 2, 9, and 11 of article 3 of this title, and numerous other provisions of this title. It has also been addressed in criminal provisions found in parts 1, 2, and 3 of article 2 of title 18, part 1 of article 4 of title 18, part 1 of article 5 of title 18, and section 18-5-205, C.R.S. These statutory provisions impose regulatory oversight and severe civil and criminal penalties on authorized and unauthorized insurance companies and other persons who commit insurance fraud. The purpose of this section is to further improve regulatory oversight of licensed persons who commit insurance fraud and provide additional remedies to aggrieved persons. (3) An allegation of a fraudulent insurance act shall not excuse an insurance company from its duty to promptly investigate a claim. (4) (a) Each insurance company licensed to do business in this state that, in a lawsuit involving a fraudulent insurance act, obtains a judgment or settlement against a person who is licensed by the state of Colorado and whose services are compensated in whole or in part, directly or indirectly, by insurance claim proceeds shall send notice of such settlement or judgment to the appropriate Colorado state licensing board, in the form prescribed by the executive director of the department of regulatory agencies. No cause of action shall arise against any insurance company or individual for providing information as provided in this subsection (4). (b) Every person who, in a lawsuit involving a fraudulent insurance act, obtains a judgment or settlement against a person who is licensed by the state of Colorado and whose Colorado Revised Statutes 2019 Page 17 of 943 Uncertified Printout services are compensated in whole or in part, directly or indirectly, by insurance claim proceeds, may send to the appropriate Colorado state licensing board notice of such settlement or judgment. No cause of action shall arise against any person for providing information as provided in this subsection (4). (c) Every person who obtains a judgment or settlement involving a fraudulent insurance act by an insurance company or an agent of an insurance company may send to the Colorado division of insurance within the department of regulatory agencies notice of such judgment or settlement, including any evidence of a fraudulent insurance act. No cause of action shall arise against any person for providing information as provided in this subsection (4). (5) (a) Every licensed insurance company doing business in Colorado shall prepare, implement, and maintain an insurance anti-fraud plan; except that this subsection (5) shall not apply to entities whose principal business is the assumption of reinsurance, reinsurance agreements, or reinsurance claims transactions. Insurance companies approved by the commissioner under article 5 of this title may be required, as a condition of such approval, to maintain an insurance anti-fraud plan. Each anti-fraud plan shall outline specific procedures, appropriate to the type of insurance provided by the insurance company in Colorado, to: (I) Prevent, detect, and investigate all forms of insurance fraud, including fraud by the insurance company's employees and agents, fraud resulting from false representations or omissions of material fact in the application for insurance, renewal documents, or rating of insurance policies, claims fraud, and security of the insurance company's data processing systems; (II) Educate appropriate employees about fraud detection and the company's anti-fraud plan; (III) Provide for the hiring of or contracting for one or more fraud investigators; (IV) Report suspected or actual insurance fraud to the appropriate law enforcement and regulatory entities in the investigation and prosecution of insurance fraud. (b) The commissioner of insurance may review a licensed insurance company's antifraud plan in connection with a market conduct examination to determine whether such plan complies with the requirements of paragraph (a) of this subsection (5). (c) Every licensed insurance company doing business in this state shall include, as part of its annual report as required in section 10-3-109, a summary of its anti-fraud efforts as described in paragraph (a) of this subsection (5). (d) The anti-fraud plan of an insurance company and the summary of anti-fraud efforts prepared as required in paragraph (c) of this subsection (5) are not public records and are exempted from article 72 of title 24, C.R.S.; are proprietary and not subject to public examination; and are not discoverable or admissible under the Colorado rules of civil procedure in any civil litigation. (e) Any insurance company or producer of an insurance company that has committed a fraudulent insurance act shall be subject to available disciplinary action by the commissioner of insurance. (f) The responsibility of an insurance company under this section to prevent, detect, and investigate insurance fraud shall not excuse its duty to comply with section 10-3-1104 or any other applicable insurance law. (6) (a) Each insurance company shall provide on all printed applications for insurance, or on all insurance policies, or on all claim forms provided and required by an insurance Colorado Revised Statutes 2019 Page 18 of 943 Uncertified Printout company, or required by law, whether printed or electronically transmitted, a statement, in conspicuous nature, permanently affixed to the application, insurance policy, or claim form substantially the same as the following: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado division of insurance within the department of regulatory agencies. (b) This subsection (6) shall not apply to reinsurance contracts, reinsurance agreements, or reinsurance claims transactions. Source: L. 2003: Entire article RC&RE, p. 601, § 1, effective July 1. L. 2006: (2)(b) amended, p. 1489, § 8, effective June 1. L. 2019: (1) amended, (HB 19-1172), ch. 136, p. 1651, § 31, effective October 1. Editor's note: This section is similar to former § 10-1-127 as it existed prior to 2002. 10-1-129. Fraudulent insurance acts - enforcement. The attorney general shall have concurrent jurisdiction with the district attorneys of this state to investigate and prosecute allegations of criminal conduct related to insurance fraud pursuant to this title and titles 8 and 18, C.R.S. The cost to the attorney general of such investigations and prosecutions shall be paid from fees collected from entities regulated by the division pursuant to section 24-31-104.5, C.R.S. Source: L. 2003: Entire article RC&RE, p. 604, § 1, effective July 1. L. 2010: Entire section amended, (HB 10-1385), ch. 204, p. 883, § 3, effective May 5. L. 2012: Entire section amended, (SB 12-110), ch. 158, p. 561, § 5, effective July 1. Editor's note: This section is similar to former § 10-1-127.5 as it existed prior to 2002. 10-1-130. Availability of sickness, health, and accident insurance. (1) The commissioner shall assess the availability of sickness, health, and accident insurance in Colorado with a view to identifying specific groups of persons to whom such coverage is unavailable by virtue of cost, preexisting condition, or other circumstances. (2) Repealed. Source: L. 2003: Entire article RC&RE, p. 604, § 1, effective July 1; entire section amended, p. 2053, § 2, effective August 6. Editor's note: (1) Subsection (1) is similar to former § 10-1-130 as it existed prior to 2002. Colorado Revised Statutes 2019 Page 19 of 943 Uncertified Printout (2) Subsection (2)(d) provided for the repeal of subsection (2), effective July 1, 2010. (See L. 2003, p. 604.) Cross references: For the legislative declaration contained in the 2003 act amending this section, see section 1 of chapter 322, Session Laws of Colorado 2003. 10-1-131. Duties to third parties - rules. (1) Pursuant to rules promulgated by the commissioner, an insurer shall notify any additional insured by endorsement on a general liability policy, whose interests are affected by a claim, of the results of the insurer's investigation of such claim and the status of the claim within a reasonable period of time as determined by the commissioner. Such notice shall include a statement confirming or denying coverage of the claim and, if coverage is denied, the reasons for denying coverage of the claim or any portion of the claim. In the event coverage has not been determined, a copy of the reservation of rights letter shall constitute sufficient notice. (2) Failure to notify any additional insured by endorsement on a general liability policy pursuant to this section shall subject the insurer to the provisions of sections 10-3-1108 and 103-1109. (3) The provisions of this section shall not apply to those claims under a general liability policy upon which a lawsuit has been filed. Source: L. 2003: Entire article RC&RE, p. 604, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-132 as it existed prior to 2002. 10-1-132. Oversight of the general assembly. Nothing in this title shall limit the ability of the general assembly to direct the accounting principles to be used by insurers authorized in this state in order to create uniformity. Source: L. 2003: Entire article RC&RE, p. 605, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-133 as it existed prior to 2002. 10-1-133. Consumer insurance council - creation - advisory body - appointment of members - meetings - repeal. (1) There is hereby created in the division the consumer insurance council, also referred to in this section as the "council". The council is an advisory body to the commissioner concerning insurance matters of interest to the public. Nothing in this section divests the commissioner of the commissioner's authority to regulate the business of insurance. (2) (a) The council consists of at least six and not more than fifteen members appointed by the commissioner, all of whom must represent consumer organizations or be consumers who are not engaged, directly or indirectly, in the insurance industry or any other industry, business, or profession that might present a conflict of interest, as determined by the commissioner. To the greatest extent possible, the council must reflect the geographic and demographic diversity of the state. Insurance producers, insurance industry representatives, actively practicing health care Colorado Revised Statutes 2019 Page 20 of 943 Uncertified Printout providers, and any other individuals who may have a conflict of interest, as determined by the commissioner, are not eligible for membership on the council. (b) The commissioner shall appoint members of the council in a timely manner. Members shall serve two-year terms with a maximum of three consecutive terms. (c) Three or more unexcused absences of a member of the council constitute grounds for the removal of the member. The chair of the council, in consultation with the commissioner, shall determine whether a member with three or more unexcused absences may continue service on the council. If a member is removed, the commissioner shall appoint a new member to serve the remaining portion of the two-year term. (d) Members of the council shall serve without compensation but are entitled to reimbursement for actual and necessary expenses incurred in traveling to and from council meetings, including any required dependent care and dependent or attendant travel, food, and lodging expenses. (3) (a) The council shall elect a chair from its membership. The chair shall serve a oneyear term and may be elected to another one-year term. (b) The council shall elect a vice-chair from its membership. The vice-chair shall serve in the absence of the chair. The vice-chair shall serve a one-year term and may be elected to another one-year term. (4) (a) The council shall meet quarterly and may request up to four additional meetings per year. All meetings of the council are open to the public. General meetings of the council shall be held at the office of the division. The council may meet in other locations of the state as agreed upon by the council. Members of the council may participate in meetings via telephonic communications. (b) A council member may request a special meeting. Requests for special meetings must be made to the chair of the council. (c) All members of the council may request topics of discussion for the council. (d) The council must act by consensus. (e) The council may submit recommendations to the commissioner, including legislative recommendations. If the council submits a recommendation to the commissioner, the commissioner shall provide a response to the council, in a timely manner, regarding the recommendation and how the commissioner will address the recommendation. (5) This section is repealed, effective September 1, 2029. Before the repeal, the council is scheduled for review in accordance with section 2-3-1203. Source: L. 2008: Entire section added, p. 158, § 1, effective July 1; (5.5) added, p. 2255, § 8, effective July 1. L. 2009: (5.5) and (6) amended, (SB 09-292), ch. 369, p. 1940, § 9, effective August 5. L. 2019: Entire section RC&RE, (HB 19-1150), ch. 113, p. 483, § 1, effective August 2. Editor's note: Subsection (6) provided for the repeal of this section, effective July 1, 2018. (See L. 2008, p. 158.) Cross references: In 2008, subsection (5.5) was enacted by the "Fair Accountable Insurance Rates Act". For the short title and the legislative declaration, see sections 1 and 2 of chapter 439, Session Laws of Colorado 2008. Colorado Revised Statutes 2019 Page 21 of 943 Uncertified Printout 10-1-134. Office of insurance ombudsman - plan - report to joint budget committee. On or before September 15, 2008, the commissioner shall present a plan to the joint budget committee of the general assembly regarding the establishment of an office of insurance ombudsman. The plan shall include an assessment of the need to establish the office, a plan to implement the office, and the estimated costs associated with establishing and maintaining the office. The plan shall require the ombudsman to assist consumers with issues related to insurance availability, claims processing, coverage questions, and other matters related to insurance consumer education and assistance. Source: L. 2008: Entire section added, p. 2247, § 2, effective August 5. 10-1-135. Reimbursement for benefits - limitations - notice - definitions - legislative declaration. (1) The general assembly hereby finds and declares that: (a) When a payer of benefits seeks repayment of the benefits provided to an injured party, the repayment reduces the amount available to the injured party to compensate him or her for injuries and damages other than the cost of medical care and medical services; (b) Reimbursement or repayment of benefits should not be permitted when the injured party would not be fully compensated for his or her injuries and damages; (c) It is in the best interests of the citizens of this state to ensure that each insured injured party recovers full compensation for bodily injury caused by the act or omission of a third party, and that such compensation is not diminished by repayment, reimbursement, or subrogation rights of the payer of benefits; (d) This law regulating insurance and health benefit plans is intended to ensure that an injured party who recovers damages for bodily injuries caused by a third party and receives benefits pursuant to an insurance policy, contract, or benefit plan is fully compensated for his or her injuries and damages before the payer of benefits may seek repayment of benefits provided to the injured party; (e) In the absence of this section, payers of benefits may seek repayment of benefits out of a recovery obtained by the injured party without paying attorney fees incurred by the injured party in obtaining the recovery, thereby benefitting from attorney services for which they did not pay; (f) This section is intended to require a payer of benefits to pay a proportionate share of the attorney fees when the payer of benefits is a beneficiary of the attorney services paid for by the injured party. (2) As used in this section, unless the context otherwise requires: (a) "Benefits" means payment or reimbursement of health care expenses, health care services, disability payments, lost wage payments, or any other benefits of any kind, including discounts and write-offs, provided to or on behalf of an injured party under a policy of insurance, contract, or benefit plan with an individual or group, whether or not provided through an employer. (b) "Injured party" means a person who has sustained bodily injury as the result of the act or omission of a third party, has pursued a personal injury or similar claim against the third party or has made a claim under his or her uninsured or underinsured motorist coverage, and has received benefits as a policyholder, participant, or beneficiary from the payer of benefits. Colorado Revised Statutes 2019 Page 22 of 943 Uncertified Printout "Injured party" includes the personal representative of the estate of an injured party or the legal representative of a person under a disability as provided in article 81 of title 13, C.R.S. (c) (I) "Payer of benefits" means any insurer, health maintenance organization, health benefit plan, preferred provider organization, employee benefit plan, other insurance policy or plan, or any other payer of benefits. "Payer of benefits" includes a fiduciary of an insurer, plan, or other payer of benefits. (II) "Payer of benefits" does not include a program of medical assistance under the "Colorado Medical Assistance Act", articles 4 to 6 of title 25.5, C.R.S., or the children's basic health plan, as defined in article 8 of title 25.5, C.R.S. (d) "Recovery" means recovery of a monetary award from a third party through either settlement or judgment to compensate an injured party for bodily injury sustained as a result of an act or omission of the third party. "Recovery" includes benefits paid or settlement of claims under uninsured or underinsured motorist coverage pursuant to section 10-4-609. (3) (a) (I) Reimbursement or subrogation pursuant to a provision in an insurance policy, contract, or benefit plan is permitted only if the injured party has first been fully compensated for all damages arising out of the claim. Any provision in a policy, contract, or benefit plan allowing or requiring reimbursement or subrogation in circumstances in which the injured party has not been fully compensated is void as against public policy. (II) This paragraph (a) does not limit the right of an insurer to seek reimbursement or subrogation to recover amounts paid for property damage or the right of an insurer providing uninsured or underinsured motorist coverage pursuant to section 10-4-609 to an injured party to pursue claims against an at-fault third party, and any amounts recovered by such insurer shall not be reduced pursuant to paragraph (c) of this subsection (3). (b) If the injured party is fully compensated and reimbursement or subrogation of benefits is authorized, the reimbursement or subrogation amount cannot exceed the amount actually paid by the payer of benefits to cover benefits under the policy, contract, or benefit plan or, for health care services provided on a capitated basis, the amount equal to eighty percent of the usual and customary charge for the same services by health care providers that provide health care services on a noncapitated basis in the geographic region in which the services are rendered. (c) The amount recoverable, if any, by the payer of benefits for reimbursement or subrogation shall be reduced by an amount equal to the payer of benefits' proportionate share of the attorney fees and expenses incurred by or on behalf of the injured party in making the recovery, based on the ratio of the amount of attorney fees and expenses incurred to the amount of the recovery. (d) (I) If the injured party makes a recovery of an amount that is less than the total amount of coverage available under any third-party liability insurance policy or uninsured or underinsured motorist coverage pursuant to section 10-4-609, there is a rebuttable presumption that the injured party has been fully compensated. If the injured party makes a recovery of an amount equal to the total amount of coverage available under all third-party liability insurance policies and uninsured or underinsured motorist coverages, there is a rebuttable presumption that the injured party has not been fully compensated. (II) If the injured party obtains a judgment, the amount of the judgment is presumed to be the amount necessary to fully compensate the injured party. (4) (a) (I) Any disputes between the payer of benefits and the injured party regarding entitlement to reimbursement or subrogation shall be resolved in accordance with this paragraph Colorado Revised Statutes 2019 Page 23 of 943 Uncertified Printout (a), regardless of whether administrative remedies contained in the policy, contract, or benefit plan documents have been exhausted by the injured party. (II) If the injured party obtains a recovery that is less than the sum of all damages incurred by the injured party and intends to enforce the requirements of subsection (3) of this section, the injured party shall notify the payer of benefits within sixty days of receipt of each recovery. The notice shall include the total amount and source of the recovery; the coverage limits applicable to any available insurance policy, contract, or benefit plan; and the amount of any costs charged to the injured party. If recovery was obtained through a settlement agreement that contains a confidentiality provision that affects the information required by this subparagraph (II), the confidentiality provision is unenforceable as to the disclosure of the required information. (III) If the payer of benefits disputes that the injured party's recovery is less than the sum of all damages incurred by the injured party, the dispute shall be resolved by arbitration. The payer of benefits may request arbitration of the dispute to determine the extent to which the payer of benefits may be entitled to share in the recovery pursuant to subsection (3) of this section. The payer of benefits may request arbitration no later than sixty days after receipt of any notice under subparagraph (II) of this paragraph (a). (IV) If the payer of benefits requests arbitration of the dispute, the injured party and the payer of benefits shall jointly choose an arbitrator to resolve the dispute. If the injured party and the payer of benefits cannot agree on an arbitrator, the dispute shall be resolved by a panel of three arbitrators selected as follows: (A) The injured party shall select one arbitrator; (B) The payer of benefits shall select one arbitrator; and (C) The arbitrators chosen by the parties pursuant to sub-subparagraphs (A) and (B) of this subparagraph (IV) shall select the third arbitrator. (b) If the arbitrator determines that the amount of the recovery does not fully compensate the injured party for his or her damages, the payer of benefits shall have no right to repayment, reimbursement, or subrogation. (5) A payer of benefits shall not deny or refuse to provide any plan benefits otherwise available to an injured party because of the existence of a potential personal injury or similar claim or the resolution of a personal injury or similar claim. (6) (a) (I) Except as provided in subparagraph (II) of this paragraph (a), a payer of benefits shall not bring a direct action for subrogation or reimbursement of benefits against a third party allegedly at fault for the injury to the injured party or an insurer providing uninsured motorist coverage. (II) If an injured party has not pursued a claim against a third party allegedly at fault for the injured party's injuries by the date that is sixty days prior to the date on which the statute of limitations applicable to the claim expires, a payer of benefits may bring a direct action for subrogation or reimbursement of benefits against an at-fault third party. Nothing in this subparagraph (II) precludes an injured party from pursuing a claim against the at-fault third party after the payer of benefits brings a direct action pursuant to this subparagraph (II), and the payer of benefits' right to reimbursement or subrogation is limited by subsection (3) of this section. (b) A third party shall not include a payer of benefits that is claiming repayment or reimbursement pursuant to subsection (3) of this section as a copayee on any check or draft in payment of a settlement with or judgment for or on behalf of the injured party. Colorado Revised Statutes 2019 Page 24 of 943 Uncertified Printout (7) (a) A payer of benefits shall not delay, withhold, or otherwise reduce benefits: (I) Because the obligation to pay benefits results from an act or omission for which a third party may be liable; or (II) As a means of enforcing or attempting to enforce a claim for reimbursement or subrogation. (b) Nothing in this subsection (7) prohibits the coordination of benefits between or among payers of benefits. (8) When a payer of benefits obtains reimbursement of benefits paid in accordance with this section, the payer of benefits shall apply the amount of the reimbursement as a credit against any lifetime maximum benefit contained in the policy, plan, or contract under which the benefits were paid. (9) Any language in an insurance policy, contract, or benefit plan that is contrary to this section is void and unenforceable. Although such language is unenforceable, nothing in this section requires an insurer to modify and refile with the commissioner, prior to the standard filing date, an insurance policy, contract, or benefit plan that contains language that is contrary to this section. (10) Nothing in this section modifies: (a) The requirement of section 13-21-111.6, C.R.S., regarding the reduction of damages based on amounts paid for the damages from a collateral source. The fact or amount of any collateral source payment or benefits shall not be admitted as evidence in any action against an alleged third-party tortfeasor or in an action to recover benefits under section 10-4-609. (b) Lien rights of hospitals pursuant to section 38-27-101, C.R.S., or of the department of health care policy and financing pursuant to section 25.5-4-301 (5), C.R.S.; or (c) Subrogation and lien rights granted to workers' compensation carriers or self-insured employers pursuant to section 8-41-203, C.R.S. Source: L. 2010: Entire section added, (HB 10-1168), ch. 164, p. 575, § 1, effective August 11. 10-1-136. Insurance policies - language other than English. (1) An insurer may conduct transactions in a language other than English. (2) An insurer authorized to offer insurance in this state may provide insurance policies, endorsements, riders, and any explanatory or advertising materials in a language other than English. If an insurer opts to provide an insurance policy, endorsement, or rider to the customer in a language other than English, the insurer must also provide the English version at the same time. In the event of a dispute or complaint regarding the insurance or advertising materials, the English language version of the insurance document controls the resolution of the dispute or complaint. (3) A non-English language policy delivered or issued for delivery in this state is deemed to be in compliance with articles 4 and 16 of this title if the insurer certifies that the policy is translated from an English language policy that is in compliance with this title. An insurer shall maintain copies of all translated policies, endorsements, riders, and any explanatory or advertising materials and make them available for review by the commissioner upon request. Colorado Revised Statutes 2019 Page 25 of 943 Uncertified Printout Source: L. 2013: Entire section added, (HB 13-1233), ch. 17, p. 622, § 31, effective August 7. L. 2014: (2) amended, (HB 14-1282), ch. 128, p. 452, § 1, effective August 6. 10-1-137. Electronic delivery of documents - when permitted - definitions - consent - construction with other laws. (1) As used in this section, unless the context otherwise requires: (a) Delivered or delivery "by electronic means" to a party includes: (I) Delivery to an electronic mail address at which the party has consented to receive notices or documents; and (II) Posting on an electronic network or website accessible to the party via the internet, mobile application, computer, mobile device, tablet, or any other electronic device if the party is given separate notice of the posting by either: (A) Electronic mail to the electronic mail address at which the party has consented to receive notice; or (B) Any other delivery method that has been consented to by the party. (b) "Party" means any recipient of a notice or document required as part of an insurance transaction. The term includes an applicant, an insured, a policyholder, and an annuity contract holder. (2) Subject to subsection (4) of this section, any notice to a party or any other document required under applicable law in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored, and presented by electronic means if it meets the requirements of the "Uniform Electronic Transactions Act", article 71.3 of title 24, C.R.S. (3) Delivery of a notice or document in accordance with this section is equivalent to any delivery method required under applicable law, including delivery by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; or certificate of mailing. (4) A notice or document may be delivered by electronic means by an insurer to a party under this section if: (a) The party has affirmatively consented to that method of delivery and has not withdrawn the consent; (b) The party, before giving consent, is provided with a clear and conspicuous statement informing the party of: (I) Any right or option of the party to have the notice or document provided or made available in paper or another nonelectronic form; (II) The right of the party to withdraw consent to have a notice or document delivered by electronic means and any conditions or consequences imposed if the consent is withdrawn; (III) Whether the party's consent applies: (A) Only to the particular transaction as to which the notice or document must be given; or (B) To identified categories of notices or documents that may be delivered by electronic means during the course of the party's relationship with the insurer; (IV) The means, after consent is given, by which the party may obtain a paper copy of a notice or document delivered by electronic means; and (V) The procedure a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update information needed to contact the party electronically; Colorado Revised Statutes 2019 Page 26 of 943 Uncertified Printout (c) The party: (I) Before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and (II) Consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and (d) If, after the party consents, a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies, the insurer: (I) Provides the party with a statement of: (A) The revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and (B) The right of the party to withdraw consent without the imposition of any condition or consequence that was not disclosed under subparagraph (II) of paragraph (b) of this subsection (4); and (II) Provides the party with a complete and updated version of the information listed in paragraph (b) of this subsection (4). (5) This section does not affect any requirement related to the content or timing of a notice or other document required under applicable law. (6) If a provision of this title or other applicable law requiring a notice or document to be provided to a party expressly requires verification or acknowledgment of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt. (7) The legal effectiveness, validity, or enforceability of any contract or policy of insurance executed by a party shall not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subparagraph (II) of paragraph (c) of subsection (4) of this section. (8) (a) A withdrawal of consent by a party: (I) Does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective; and (II) Is effective within a reasonable period of time after receipt of the withdrawal by the insurer. (b) An insurer's failure to comply with paragraph (d) of subsection (4) of this section may be treated, at the election of the party, as a withdrawal of consent for purposes of this section. (9) This section does not apply to a notice or document delivered by electronic means before August 6, 2014, to a party who, before that date, had consented to receive notice or documents in an electronic form otherwise allowed by law. (10) If the consent of a party to receive certain notices or documents in an electronic form is on file with an insurer before August 6, 2014, and the insurer intends to deliver additional notices or documents to such party in an electronic form pursuant to this section, then, Colorado Revised Statutes 2019 Page 27 of 943 Uncertified Printout before delivering the additional notices or documents by electronic means, the insurer shall notify the party of: (a) Any notices or documents that may be delivered by electronic means under this section that were not previously delivered electronically; and (b) The party's right to withdraw consent to have notices or documents delivered by electronic means. (11) (a) Except as otherwise provided by law, if an oral communication or a recording of an oral communication from a party can be reliably stored and reproduced by an insurer, the oral communication or recording qualifies as a notice or document delivered by electronic means for purposes of this section. (b) If a provision of this title or other applicable law requires a signature or notice or document to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by the provision, is attached to or logically associated with the signature, notice, or document. (12) (a) This section shall not be construed to modify, limit, or supersede the provisions of the federal "Electronic Signatures in Global and National Commerce Act", Pub.L. 106-229, as amended. (b) In the event of any conflict between this section and the "Uniform Electronic Transactions Act", article 71.3 of title 24, C.R.S., this section controls. Source: L. 2014: Entire section added, (HB 14-1344), ch. 207, p. 762, § 1, effective August 6. 10-1-138. Internet posting of standard insurance provisions - conditions - notice of revisions. (1) Notwithstanding any provision of section 10-1-137 to the contrary, standard insurance policies and endorsements that do not contain personally identifiable information may be mailed, delivered, or posted on the insurer's website. If the insurer elects to post insurance policies and endorsements on its website in lieu of mailing or delivering them to the insured, it shall comply with all of the following conditions: (a) The policies and endorsements must be accessible on the website and remain so for as long as the policies are in force. (b) The policies and endorsements must be posted in a manner that enables the insured to print and save the policies and endorsements using programs or applications that are widely available on the internet and free to use. (c) The insurer shall provide the following information in, or simultaneously with, each declarations page provided at the time of issuance of the initial policy and any renewals of that policy: (I) A description of the exact policy and endorsement forms purchased by the insured; (II) A method by which the insured may obtain, upon request and without charge, a paper or electronic copy of each policy and endorsement purchased by the insured; and (III) The internet address where the insured's policies and endorsements are posted. (d) The insurer shall archive its expired policies and endorsements for at least five years and make them available upon request. Colorado Revised Statutes 2019 Page 28 of 943 Uncertified Printout (e) The insurer shall provide the insured with notice, in the same manner in which the insurer customarily communicates with the insured, of: (I) Any changes to the forms or endorsements; (II) The insured's right to obtain, upon request and without charge, a paper copy of the forms or endorsements; and (III) The internet address where the forms or endorsements are posted. Source: L. 2014: Entire section added, (HB 14-1344), ch. 207, p. 762, § 1, effective August 6. 10-1-139. Confidentiality. (1) Except as otherwise provided by law, when the commissioner conducts an investigation, all documents, including working papers, claim files, recorded information, electronic mail, and all copies of those documents, that are produced or obtained by or disclosed to the commissioner or any other person in the course of the investigation shall be treated as confidential until the commissioner concludes the investigation. After an investigation is concluded, the records are subject to the "Colorado Open Records Act", part 2 of article 72 of title 24. (2) This section does not apply to an examination conducted pursuant to part 2 of this article 1 or to a market conduct surveillance conducted pursuant to part 3 of this article 1. Source: L. 2017: Entire section added, (HB 17-1231), ch. 284, p. 1552, § 1, effective January 1, 2018. 10-1-140. Subpoena authority. The division may issue subpoenas, administer oaths, and examine under oath any person as to any matter relevant to the regulatory authority of the division. Upon the failure or refusal of a person to obey a subpoena, the division may petition a court of competent jurisdiction for an order, which order is enforceable through contempt proceedings, compelling the person to appear and testify or produce documentary evidence. The commissioner may arrange for the services of an administrative law judge appointed pursuant to part 10 of article 30 of title 24 to take evidence and to make findings and report them to the commissioner. Source: L. 2017: Entire section added, (HB 17-1231), ch. 284, p. 1552, § 1, effective January 1, 2018. 10-1-141. Investigations - rules. (1) The commissioner may contract, pursuant to section 24-50-504 (2)(c) and (2)(e), with a person that has technical or subject matter expertise or skill and experience in investigative techniques to assist the division in performing investigations of a company or producer pursuant to this title 10 when the commissioner determines that the division lacks sufficient technical expertise to perform the investigation. Investigations conducted pursuant to this section do not include market conduct surveillance actions conducted pursuant to part 3 of this article 1. The commissioner shall, by rule, establish when contract investigators may be used for investigations. The rules must include out-of-state travel requirements, criteria for when special expertise is required for the investigation, and a Colorado Revised Statutes 2019 Page 29 of 943 Uncertified Printout requirement that there must be a significant pattern of complaints or a well-documented allegation against a company for an investigation to be warranted. (2) The investigated company or producer shall pay the reasonable fees and expenses of a person retained or designated for investigations of the company or producer pursuant to subsection (1) of this section directly to the retained or designated person, as determined by the commissioner. The investigated company or producer may contest the amount of fees and expenses charged by the retained or designated person by filing an objection with the commissioner, setting forth the charges that the investigated company or producer considers to be unreasonable and the basis for the claim that the charges are unreasonable. A disputed amount is not due unless the commissioner reviews the objection and makes a written finding that the disputed charges were reasonable in relation to the investigation performed. Source: L. 2017: Entire section added, (HB 17-1231), ch. 284, p. 1553, § 1, effective January 1, 2018. 10-1-142. Prohibition on denial of coverage or increase in premiums of insurance for living organ donors - commissioner to enforce - short title - definitions. (1) The short title of this section is the "Living Donor Protection Act of 2019". (2) Notwithstanding any other law, a person subject to regulation by the division pursuant to this title 10 shall not: (a) Decline or limit coverage of a person under a policy or contract for life insurance, disability income insurance, health insurance, or long-term care insurance due to the status of the person as a living organ donor; (b) Preclude a person from donating all or part of an organ as a condition of receiving a policy or contract for life insurance, disability income insurance, health insurance, or long-term care insurance; (c) Consider the status of a person as a living organ donor in determining the premium rate for coverage of the person under a policy or contract for life insurance, disability income insurance, health insurance, or long-term care insurance; or (d) Otherwise discriminate in the offering, issuance, cancellation, amount of coverage, price, or any other condition of a policy or contract for life insurance, disability income insurance, health insurance, or long-term care insurance for a person based solely and without any additional actuarial risks upon the status of the person as a living organ donor. (3) The commissioner may use any of the commissioner's enforcement powers to obtain a person's compliance with this section. (4) (a) The division shall provide information to the public on the access of a living organ donor to insurance as specified in this section. If the division receives materials related to live organ donation from a recognized live organ donation organization, the division shall make the materials available to the public. (b) If the department of public health and environment receives materials related to live organ donation from a recognized live organ donation organization, the department of public health and environment shall make the materials available to the public. (c) The division and the department of public health and environment may seek and accept gifts, grants, or donations from private or public sources for the purposes of this subsection (4). Colorado Revised Statutes 2019 Page 30 of 943 Uncertified Printout (5) As used in this section: (a) "Disability income insurance" means a contract under which an entity promises to pay a person a sum of money in the event that an illness or injury resulting in a disability prevents the person from working. (b) "Health insurance" means a health benefit plan as defined in section 10-16-102 (32). (c) "Life insurance" has the same meaning as set forth in section 10-7-301.5 (5). (d) "Living organ donor" means a living person who has donated all or part of an organ. (e) "Long-term care insurance" has the same meaning as set forth in section 10-19-103 (5). Source: L. 2019: Entire section added, (HB 19-1253), ch. 367, p. 3368, § 1, effective August 2. Editor's note: Section 2 of chapter 367 (HB 19-1253), Session Laws of Colorado 2019, provides that the act adding this section applies to policies and contracts entered into or renewed on or after August 2, 2019. PART 2 EXAMINATIONS 10-1-201. Legislative declaration. The general assembly finds, determines, and declares that it is necessary to establish an effective and efficient system for examining the activities, operations, financial conditions, and affairs of all persons transacting the business of insurance in this state and all persons otherwise subject to the jurisdiction of the commissioner. The provisions of this part 2 are intended to enable the commissioner to adopt a flexible system of examinations that directs resources as may be deemed appropriate and necessary for the administration of the insurance and insurance-related laws of this state. Source: L. 2003: Entire article RC&RE, p. 605, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-201 as it existed prior to 2002. 10-1-202. Definitions. As used in this part 2, unless the context otherwise requires: (1) "Company" means any person or group of persons engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to any administrative, regulatory, or taxing authority of the commissioner as well as any advisory organization or rating organization as defined in section 10-4-402. (2) "Examination" means a formal financial examination, as well as informal examinations, conducted by the commissioner for the purpose of determining compliance with the law. (3) "Examiner" means any individual or firm authorized by the commissioner to conduct an examination under this part 2. Colorado Revised Statutes 2019 Page 31 of 943 Uncertified Printout (4) "Informal examination" means all inquiries by the division into the financial condition of a company, other than the formal financial examination of a company that must be conducted once every five years pursuant to section 10-1-203 (1). (5) "Insurance department" means the commissioner or other government official or agency of a state other than Colorado exercising powers and duties substantially equivalent to those of the commissioner or the division. (6) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by, the commissioner or any equivalent insurance supervisory official of another state. (7) "NAIC" or "national association of insurance commissioners" means the organization of insurance regulators from the fifty states, the District of Columbia, and the four United States territories. (8) "Person" means any individual, aggregation of individuals, trust, association, partnership, or corporation, or any agent or affiliate thereof. Source: L. 2003: Entire article RC&RE, p. 605, § 1, effective July 1. L. 2006: (1.5), (1.7), and (8) to (19) added and (7) amended, p. 960, § 3, effective January 1, 2007. L. 2017: Entire section amended, (HB 17-1231), ch. 284, p. 1553, § 2, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-202 as it existed prior to 2002. Cross references: For the legislative declaration contained in the 2006 act enacting subsections (1.5), (1.7), and (8) to (19) and amending subsection (7), see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-203. Authority, scope, and scheduling of examinations. (1) The commissioner or the commissioner's designee may conduct an examination of any company as often as the commissioner, in the commissioner's sole discretion, deems appropriate but shall, at a minimum, conduct a formal financial examination of every insurer licensed in this state not less frequently than once every five years; except that this does not include eligible nonadmitted insurers regulated in accordance with article 5 of this title 10. In scheduling financial examinations and in determining their nature, scope, and frequency, the commissioner shall consider matters such as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants, and other criteria as set forth in the most recent available edition of the examiners' handbook adopted by the national association of insurance commissioners. (2) For purposes of completing an examination of any company under this part 2, the commissioner may examine or investigate any person or the business of any person insofar as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company. (3) In lieu of a financial examination under this part 2 of any foreign or alien insurer licensed in this state, the commissioner may accept an examination report on the company as prepared by the insurance department for the company's state of domicile or port-of-entry state; except that such reports may only be accepted if: Colorado Revised Statutes 2019 Page 32 of 943 Uncertified Printout (a) The insurance department was, at the time of the examination, accredited under the national association of insurance commissioners' financial regulation standards and accreditation program; or (b) The examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by such an accredited state insurance department and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by the examiners' insurance department. Source: L. 2003: Entire article RC&RE, p. 606, § 1, effective July 1. L. 2012: (1) amended, (HB 12-1215), ch. 104, p. 354, § 7, effective August 8. L. 2017: (1) amended, (HB 171231), ch. 284, p. 1555, § 3, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-203 as it existed prior to 2002. 10-1-204. Conduct of examinations - conferences. (1) (a) In conducting the examination, the examiners shall observe those guidelines and procedures set forth in the examiners' handbook adopted by the national association of insurance commissioners and the Colorado insurance examiners handbook. The commissioner may also employ other guidelines or procedures as the commissioner deems appropriate. (b) Repealed. (2) (a) Every company or person from whom information is sought and all officers, directors, and agents of the company or person shall provide to the examiners timely, convenient, and free access at reasonable hours at its offices to all books, records, accounts, papers, tapes, computer records, and other documents relating to the property, assets, business, and affairs of the company being examined. The company or person shall make the books, records, and documents available for examination or inspection at the office location of the division when the commissioner determines that it is reasonably cost-effective to do so. The officers, directors, employees, and agents of the company or person shall facilitate the examination and aid in the examination to the extent it is in their power to do so. (b) (I) The refusal of any company or any of its officers, directors, employees, or agents to submit to examination or to comply with any reasonable written request of the examiners shall be grounds for suspension, revocation, denial, or nonrenewal of any license or authority held by the company and subject to the commissioner's jurisdiction. (II) Proceedings for any suspension or revocation pursuant to this subsection (2) shall be conducted in accordance with section 10-1-110. (3) Repealed. (4) Any person who knowingly or willfully testifies falsely in reference to any matter material to an examination or inquiry is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than five thousand dollars, by imprisonment in the county jail for not more than three months, or by both such fine and imprisonment. (5) Any person who knowingly or willfully makes any false certificate, entry, or memorandum upon any of the books or papers of a company or upon any statement filed or offered to be filed in the division or used in the course of any examination or inquiry, with the intent to deceive the commissioner or any person appointed by the commissioner to conduct or Colorado Revised Statutes 2019 Page 33 of 943 Uncertified Printout make the examination or inquiry, is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than five thousand dollars, by imprisonment in the county jail for not less than two months nor more than twelve months, or by both such fine and imprisonment. (6) (a) In addition to any other powers granted to the commissioner in this section or in any other provision of law, the commissioner may require any company, entity, or new applicant to be examined by independent examiners certified by the society of financial examiners or the insurance regulatory examiners society, actuaries who are members of the American academy of actuaries, or by any other qualified and competent loss reserve specialists, independent risk managers, independent certified public accountants, auditors, other examiners of insurance companies, or combination of such persons. Any domestic company may make a request to the commissioner to be so examined. (b) (I) The commissioner may accept, as part of an examination, reports made by any person qualified and competent to conduct the examination as set forth in this subsection (6); except that neither the person, nor any member of the person's immediate family, may be: (A) An officer of, connected with, or financially interested in the company, entity, or applicant being examined, other than as a policyholder; or (B) Financially interested in any other corporation or person affected by the examination or by any related investigation or hearing. (II) A person that conducts an examination pursuant to this subsection (6) shall keep strictly confidential all information, regardless of its source, obtained through any examination or about any examinee and shall disclose the information only to the commissioner or the examinee upon the specific request of either. The commissioner shall establish guidelines for assuring the neutrality of those persons to be authorized to supplement the examination procedures authorized in this section. (III) The examinee shall pay the reasonable expenses and charges of a person retained or designated pursuant to this subsection (6) directly to the person. The examinee may contest the amount of fees, costs, and expenses charged by the person by filing an objection with the commissioner, setting forth the charges that the examinee considers to be unreasonable and the basis for the claim that the charges are unreasonable. A disputed amount is not due to the examiner unless the commissioner reviews the objection and makes a written finding that the disputed charges were reasonable in relation to the examination performed. (7) Nothing contained in this part 2 shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action. (8) Nothing contained in this part 2 shall be construed to limit the commissioner's authority to use and, if appropriate, to make public, if consistent with section 10-3-414, any final or preliminary examination report, any examiner or company work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action that the commissioner may, in the commissioner's sole discretion, deem appropriate. (9) (a) For examinations of foreign companies made outside the borders of this state and of executive or branch offices of domestic companies located outside the borders of this state, the examined company shall pay the costs of the examination, including the expenses of the Colorado Revised Statutes 2019 Page 34 of 943 Uncertified Printout commissioner and the commissioner's assistants, who must be paid the same compensation as other examiners on such examinations. (b) and (c) Repealed. (d) When insurance companies not authorized to do business in this state, companies adjudged insolvent, or companies for any cause withdrawing from this state neglect, fail, or refuse to pay the reasonable charges for examination as approved by the commissioner, such charges shall be paid by the state treasurer from the general fund upon the order of the commissioner, and the amount so paid shall be a first lien upon all assets and property of such company and may be recovered by suit by the attorney general on behalf of the state of Colorado and restored to the general fund. (10) and (11) Repealed. Source: L. 2003: Entire article RC&RE, p. 607, § 1, effective July 1. L. 2014: (11) added, (SB 14-210), ch. 267, p. 1068, § 1, effective August 6. L. 2017: (1)(a), (2)(a), (4), (5), (6)(b), and (9)(a) amended and (1)(b), (3), (9)(b), (9)(c), (10), and (11) repealed, (HB 17-1231), ch. 284, p. 1556, § 4, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-204 as it existed prior to 2002. 10-1-205. Financial examination reports. (1) Examination reports must comprise only facts appearing upon the books, records, or other documents of the company, its agents, or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and the conclusions and recommendations as the examiners find reasonably warranted based upon the facts. (2) No later than sixty days after completion of the examination, the examiner in charge shall file with the division a verified written report of examination under oath. Upon receipt of the verified report, the division shall transmit to the company examined both the report and a notice stating that the company examined shall be afforded a reasonable period not exceeding thirty days, within which to make a written submission or rebuttal with respect to any matters contained in the examination report. (3) Within thirty days after the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, any written submissions or rebuttals, and any relevant portions of the examiner's work papers and shall enter an order that does one or more of the following: (a) Adopts the examination report as filed or with specified modifications or corrections; and if the examination report reveals that the company is operating in violation of any law, rule, or prior lawful order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure such violation; or (b) Rejects the examination report and directs the examiners to reopen the examination for purposes of obtaining additional data, documentation, or information and to refile the report pursuant to subsection (1) of this section; or (c) Calls for an investigatory hearing, upon no less than twenty days' notice to the company, for purposes of obtaining additional documentation, data, information, and testimony; or Colorado Revised Statutes 2019 Page 35 of 943 Uncertified Printout (d) May impose a monetary penalty of not more than three thousand dollars for every act in violation of any law, rule, or prior lawful order of the commissioner described in the report of examination, but not to exceed an aggregate penalty of thirty thousand dollars unless the company knew or reasonably should have known that its conduct was in violation of any law, rule, or prior lawful order of the commissioner, in which case the penalty shall not be more than thirty thousand dollars for every act or violation, but not to exceed an aggregate penalty of seven hundred fifty thousand dollars annually. (4) (a) All orders entered pursuant to subsection (3)(a) of this section must be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner work papers, and any written submissions or rebuttals. The order is a final agency decision and must be served upon the company by certified mail together with a copy of the adopted examination report. Notwithstanding the requirements of section 10-1-127, the final agency decision is subject to judicial review by the district court pursuant to section 24-4-106.Within thirty days after issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that the directors have received a copy of the adopted report and related orders. (b) Any hearing conducted under paragraph (c) of subsection (3) of this section by the commissioner or an authorized representative shall be conducted as a nonadversarial, confidential, investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the commissioner's review of relevant work papers or by the written submission or rebuttal of the company. Such hearing shall not be subject to the "State Administrative Procedure Act", article 4 of title 24, C.R.S. Within twenty days after the conclusion of any such hearing, the commissioner shall enter an order pursuant to paragraph (a) of subsection (3) of this section. (c) The commissioner shall not appoint an examiner as an authorized representative to conduct the hearing. The hearing shall proceed expeditiously with discovery by the company limited to the examiner's work papers that tend to substantiate any assertions set forth in any written submission or rebuttal. The commissioner or representative may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation, whether under the control of the division, the company, or other persons. The documents produced shall be included in the record. Testimony taken by the commissioner or representative shall be under oath and preserved for the record. (d) The hearing shall proceed with the commissioner or representative posing questions to the persons subpoenaed. Thereafter, the company and the division may present testimony relevant to the investigation. The company and the division shall be permitted to make closing statements and may be represented by counsel of their choice. (e) Any order issued by the commissioner pursuant to subsection (3)(d) of this section may be appealed to the district court. (5) Upon the adoption of the examination report pursuant to paragraph (a) of subsection (3) of this section, the commissioner shall continue, for at least thirty days, to hold the content of the examination report as private and confidential information except to the extent provided in subsection (2) of this section. Thereafter, the commissioner may open the report for public inspection unless a court of competent jurisdiction has stayed its publication. Colorado Revised Statutes 2019 Page 36 of 943 Uncertified Printout (6) No provision of this title shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto to the insurance division of this or any other state or country, or to law enforcement officials of this or any other state, or to any agency of the federal government at any time subject to the written agreement of the recipient to hold such information confidential and to treat it in a manner consistent with this part 2. (7) In the event the commissioner determines that regulatory action is appropriate as a result of any examination, the commissioner may initiate any proceedings or actions as provided by law. (8) Confidentiality of ancillary information. (a) All working papers, recorded information, documents, and copies thereof that are produced or obtained by or disclosed to the commissioner or any other person in the course of an examination made under this part 2 or in the course of analysis of the financial condition of the company by the commissioner are confidential, are not subject to subpoena, and may not be made public by the commissioner or any other person except to the extent provided in subsection (5) of this section; except that the commissioner may grant the NAIC access to the materials. Disclosure of the materials may be made only upon the prior written agreement of the recipient to hold the information confidential as required by this section or upon the prior written consent of the company to which it pertains. (b) Neither the commissioner nor any person who received the documents, materials, or other information while acting under the authority of the commissioner, including the NAIC and its affiliates and subsidiaries, may testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (8)(a) of this section. Source: L. 2003: Entire article RC&RE, p. 610, § 1, effective July 1. L. 2004: IP(3) amended, p. 1058, § 2, effective July 1. L. 2008: (3)(d) amended, p. 2171, § 1, effective August 5. L. 2017: (1), (4)(a), (4)(e), and (8) amended, (HB 17-1231), ch. 284, p. 1558, § 5, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-205 as it existed prior to 2002. 10-1-206. Conflict of interest. (1) No examiner may be appointed by the commissioner if such examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this part 2; except that this section shall not be construed to automatically preclude an examiner from being: (a) A policyholder or claimant under an insurance policy; (b) A grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business; (c) An investment owner in shares of regulated diversified investment companies; or (d) A settlor or beneficiary of a "blind trust" into which any otherwise impermissible holdings have been placed. (2) Notwithstanding any provision of this section to the contrary, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions even though such Colorado Revised Statutes 2019 Page 37 of 943 Uncertified Printout persons may from time to time be similarly employed or retained by persons subject to examination under this part 2. Source: L. 2003: Entire article RC&RE, p. 612, § 1, effective July 1. Editor's note: This section is similar to former § 10-1-206 as it existed prior to 2002. 10-1-207. Immunity from liability - prohibited activity. (1) No cause of action shall arise, nor shall any liability be imposed, against the commissioner, the commissioner's authorized representatives, or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this part 2. (2) No cause of action shall arise, nor shall any liability be imposed, against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this part 2, if such act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. (3) This section does not abrogate or modify in any way any common-law or statutory privilege or immunity heretofore enjoyed by any person identified in subsection (1) of this section. (4) A person identified in subsection (1) of this section shall be entitled to an award of attorney fees and costs if such person is the prevailing party in a civil action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this part 2 and the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated. (5) An insurer shall not take any retaliatory personnel action against an employee because the employee provides information to or testifies before the commissioner conducting an examination into the practices of the company. (6) (a) An employee who has been the subject of a retaliatory personnel action in violation of subsection (5) of this section may institute a civil action in a court of competent jurisdiction for relief within one year after the date of the alleged retaliatory action. (b) A court of competent jurisdiction may order relief as follows: (I) Reinstatement of the employee to the same position held before the retaliatory personnel action or an equivalent position; (II) Reinstatement of full benefits and seniority rights; and (III) Compensation for lost wages and benefits. (c) Upon a determination that an insurer has taken a retaliatory personnel action, the court may award costs of the action together with reasonable attorney fees. Source: L. 2003: Entire article RC&RE, p. 613, § 1, effective July 1. L. 2006: (5) and (6) added, p. 971, § 5, effective January 1, 2007. L. 2017: (5) amended, (HB 17-1231), ch. 284, p. 1560, § 6, effective January 1, 2018. Editor's note: This section is similar to former § 10-1-207 as it existed prior to 2002. Colorado Revised Statutes 2019 Page 38 of 943 Uncertified Printout Cross references: For the legislative declaration contained in the 2006 act enacting subsections (5) and (6), see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-208. Informal investigations. (Repealed) Source: L. 2004: Entire section added, p. 72, § 1, effective March 8. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. 10-1-209. Short title. (Repealed) Source: L. 2006: Entire section added, p. 962, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-210. Market analysis procedures. (Repealed) Source: L. 2006: Entire section added, p. 962, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-211. Protocols for market conduct actions. (Repealed) Source: L. 2006: Entire section added, p. 964, § 4, effective January 1, 2007. L. 2012: (6) added, (HB 12-1266), ch. 280, p. 1494, § 7, effective July 1. L. 2013: (6) amended, (HB 131236), ch. 202, p. 840, § 5, effective May 11. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-212. Targeted, on-site market conduct examinations - rules. (Repealed) Source: L. 2006: Entire section added, p. 965, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-213. Confidentiality requirements. (Repealed) Colorado Revised Statutes 2019 Page 39 of 943 Uncertified Printout Source: L. 2006: Entire section added, p. 968, § 4, effective January 1, 2007. L. 2010: (5) added, (HB 10-1220), ch. 197, p. 852, § 8, effective July 1. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-214. Market conduct surveillance personnel. (Repealed) Source: L. 2006: Entire section added, p. 970, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-215. Fines and penalties. (Repealed) Source: L. 2006: Entire section added, p. 970, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-216. Participation in national market conduct databases. (Repealed) Source: L. 2006: Entire section added, p. 970, § 4, effective January 1, 2007. L. 2017: Entire section repealed, (HB 17-1231), ch. 284, p. 1560, § 7, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-217. Coordination with other states through NAIC. The commissioner shall share information and coordinate the division's examination efforts with other states through the NAIC. Source: L. 2006: Entire section added, p. 971, § 4, effective January 1, 2007. L. 2017: Entire section amended, (HB 17-1231), ch. 284, p. 1560, § 8, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. 10-1-218. Additional duties of commissioner. (1) Repealed. (2) (a) The commissioner shall designate a specific person or persons within the division whose responsibilities shall include the receipt of information from employees of insurers and Colorado Revised Statutes 2019 Page 40 of 943 Uncertified Printout licensed entities concerning violations of laws or rules by insurers. The designated person or persons shall be provided with proper training on the handling of the information, including procedures to maintain the confidentiality of the communication for purposes of this section. (b) The information received pursuant to this subsection (2) is a confidential communication and is not public information. Source: L. 2006: Entire section added, p. 971, § 4, effective January 1, 2007. L. 2017: (1) repealed, (HB 17-1231), ch. 284, p. 1560, § 9, effective January 1, 2018. Cross references: For the legislative declaration contained in the 2006 act enacting this section, see section 1 of chapter 211, Session Laws of Colorado 2006. PART 3 MARKET CONDUCT 10-1-301. Legislative declaration. The general assembly finds, determines, and declares that it is necessary to establish an effective and efficient system for reviewing, evaluating, and analyzing the activities, operations, and affairs of all persons transacting the business of insurance in this state and all persons otherwise subject to the jurisdiction of the commissioner. This part 3 is intended to enable the commissioner to adopt a flexible system of review, evaluation, and analysis that directs resources as may be deemed appropriate and necessary for the administration of the insurance and insurance-related laws of this state. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1560, § 10, effective January 1, 2018. 10-1-302. Definitions. As used in this part 3, unless the context otherwise requires: (1) "Commissioner" means the commissioner of insurance, the commissioner's deputies, or the division of insurance. (2) "Company" means any person or group of persons engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business or any person or group of persons who may otherwise be subject to any administrative, regulatory, or taxing authority of the commissioner, as well as any advisory organization or rating organization as defined in section 10-4-402. (3) "Complaint" means any written communication, or oral communication that is subsequently converted to a written form, that expresses a grievance or dissatisfaction with a specific person or entity subject to regulation by the division. (4) "Division" means the division of insurance, the commissioner of insurance, or a government official or agency of a state other than Colorado exercising powers and duties substantially equivalent to those of the commissioner or the division. (5) "Market analysis" means a process whereby market conduct surveillance personnel collect and analyze information from filed schedules, surveys, required reports, and other sources in order to develop a baseline understanding of the marketplace and to identify patterns Colorado Revised Statutes 2019 Page 41 of 943 Uncertified Printout or practices of companies that deviate from the norm or that may pose risk to the insurance consumer. (6) "Market conduct examination" includes any type of examination as set forth in the Market Regulation Handbook that assesses a company's compliance with the laws, rules, and regulations applicable to the company. Market conduct examinations include desk examinations, on-site examinations, follow up examinations, and targeted examinations. (7) "Market conduct surveillance" means any of the full range of activities that the commissioner may initiate to assess and address the market practices of any company licensed or registered pursuant to this title 10 to conduct business in this state, including market analysis, interrogatories, and market conduct examinations. (8) "Market conduct surveillance personnel" means those individuals employed by or under contract with the commissioner to collect, analyze, review, or act on information about the insurance marketplace that identifies patterns or practices of companies. (9) "Market Regulation Handbook" means the guidelines developed and issued by the NAIC that are designed to be used to conduct uniform, standardized market conduct surveillance. (10) "NAIC" or "national association of insurance commissioners" means the organization of insurance regulators from the fifty states, the District of Columbia, and the four United States territories. (11) "Person" means any individual, aggregation of individuals, trust, association, partnership, or corporation, or any agent or affiliate thereof. (12) "Standard data request" means the set of field names and descriptions developed and adopted by the NAIC for use by market conduct surveillance personnel in an examination. (13) "Third-party model or product" means a model or product provided by an entity separate from and not under direct or indirect corporate control of the company using the model or product. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1561, § 10, effective January 1, 2018. 10-1-303. Market analysis - market conduct surveillance. (1) The commissioner may perform market analysis by gathering and analyzing information from data currently available to the commissioner, information from surveys, data calls, or reports that are submitted regularly to the commissioner, information collected by the NAIC, and information from a variety of other sources in both the public and private sectors in order to develop a baseline understanding of the marketplace and to identify for further review companies or practices that deviate from the norm or that may pose a potential risk to the insurance consumer. The commissioner shall use the Market Regulation Handbook as a guide in performing the market analysis. (2) (a) If the commissioner determines that further inquiry into a particular company or practice is needed, the commissioner may consider the continuum of other types of market conduct surveillance as specified in this subsection (2)(a). The commissioner shall inform the company in writing of the type of market conduct surveillance selected if it involves company participation or response. The types of market conduct surveillance include: (I) Correspondence with the company; (II) Company interviews; Colorado Revised Statutes 2019 Page 42 of 943 Uncertified Printout (III) Information gathering; (IV) Policy and procedure reviews; (V) Interrogatories; (VI) Review of company self-evaluations and voluntary compliance programs; (VII) Self-audits; and (VIII) Market conduct examinations. (b) (I) The commissioner shall take steps reasonably necessary to eliminate requests for information that duplicate information provided as part of a company's financial statement, the NAIC's market conduct annual statement, or other required surveys, data calls, or reports that are submitted regularly to the commissioner. (II) The commissioner may coordinate the market conduct surveillance and findings of this state with market conduct surveillance and findings of other states. (3) Nothing in this section requires the commissioner to conduct market analysis prior to initiating any other type of market conduct surveillance. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1562, § 10, effective January 1, 2018. 10-1-304. Authority and scope of market conduct surveillance - rules. (1) The commissioner may conduct market conduct surveillance of any company as often as the commissioner, in the commissioner's sole discretion, deems appropriate. When initiating market conduct surveillance and in determining its nature, scope, and frequency, the commissioner may consider any market analysis performed pursuant to section 10-1-303 and any other criteria as set forth in the most recent available edition of the Market Regulation Handbook. (2) For purposes of completing market conduct surveillance of any company under this part 3, the commissioner may review, evaluate, or analyze any person or the business of any person to the extent the action is, in the sole discretion of the commissioner, necessary or material to the market conduct surveillance. (3) In conducting market conduct surveillance, market conduct surveillance personnel shall consider those guidelines and procedures set forth in the most recent available edition of the Market Regulation Handbook. The commissioner may also employ other standard insurance industry guidelines or procedures the commissioner deems appropriate. (4) Any person who knowingly or willfully testifies falsely in reference to any matter material to any market conduct surveillance, or who knowingly or willfully makes any false certificate, entry, or memorandum upon any of the books or papers of a company or upon any statement filed or offered to be filed with the commissioner or used in the course of any market conduct surveillance or inquiry is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than five thousand dollars, or by imprisonment in the county jail for not more than three months, or by both such fine and imprisonment. (5) (a) Every company or person from whom information is sought and all officers, directors, and agents of the company or person shall provide to the market conduct surveillance personnel timely, convenient, and free access to all books, records, accounts, papers, tapes, computer records, and other documents relating to the property, assets, business, and affairs of the company. The officers, directors, employees, and agents of the company or person shall Colorado Revised Statutes 2019 Page 43 of 943 Uncertified Printout facilitate the market conduct surveillance and aid in the review, evaluation, or analysis to the extent it is in their power to do so. (b) (I) The refusal of any company or any of its officers, directors, employees, or agents to submit to any type of market conduct surveillance or to comply with any reasonable written request of market conduct surveillance personnel is grounds for suspension, revocation, denial, or nonrenewal of any license or authority held by the company and subject to the commissioner's jurisdiction. (II) Proceedings for any suspension or revocation pursuant to this subsection (5)(b) must be conducted in accordance with section 10-1-110. (6) (a) The company subject to market conduct surveillance shall pay the reasonable fees and expenses of the market conduct surveillance. (b) (I) The commissioner or the commissioner's assistants shall conduct market conduct surveillance of a domestic company unless the commissioner determines that good cause exists to have the market conduct surveillance conducted by contract market conduct surveillance personnel. (II) The commissioner shall adopt rules for determining when contract market conduct surveillance personnel may be used and the reasonable fees and expenses that the company subject to the market conduct surveillance shall pay. The rules must include factors such as travel requirements, workload needs, special expertise required for the market conduct surveillance, and market issues requiring any unanticipated market conduct surveillance. (c) When an insurance company not authorized to do business in this state, a company adjudged insolvent, or a company withdrawing from this state for any cause neglects, fails, or refuses to pay the reasonable fees and expenses for market conduct surveillance as approved by the commissioner: (I) The state treasurer shall pay the fees and expenses from the general fund upon the order of the commissioner; and (II) The amount paid is a first lien upon all assets and property of the company and may be recovered by suit filed by the attorney general on behalf of the state of Colorado and credited to the general fund. (7) Nothing in this part 3 limits the commissioner's authority to terminate or suspend any market conduct surveillance in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. (8) (a) Where the reasonable and necessary cost of any type of market conduct surveillance is to be assessed against the company subject to the market conduct surveillance, the fee must be consistent with the Market Regulation Handbook. The fees and expenses must be itemized and must include receipts for all applicable expenses, and invoices shall be provided to the division on at least a monthly basis for review prior to submission to the company for payment. The company subject to the market conduct surveillance shall pay fees and expenses at least monthly. (b) The commissioner shall maintain active management and oversight of costs, including costs associated with the commissioner's own market conduct surveillance personnel and with retaining qualified contract market conduct surveillance personnel. To the extent the commissioner retains outside assistance, the commissioner shall have written protocols that: (I) Establish and utilize a dispute resolution or arbitration mechanism to resolve conflicts with companies regarding fees and expenses; and Colorado Revised Statutes 2019 Page 44 of 943 Uncertified Printout (II) Require disclosure of the terms of the contracts with the outside consultants that will be used, including the fees and hourly rates that may be charged. (c) A company cannot be required to reimburse any portion of fees under this subsection (8) incurred by market conduct surveillance personnel that exceeds the fees prescribed in the Market Regulation Handbook and any successor documents to that handbook, unless the commissioner demonstrates that the fees prescribed in the Market Regulation Handbook are inadequate under the circumstances of the type of market conduct surveillance conducted. (d) A company may request an independent audit of the fees and expenses charged within twelve months after the completion of any type of market conduct surveillance. The company is responsible for the cost of the independent audit. Market conduct surveillance personnel shall maintain documentation supporting the fees and expenses charged to the company for at least twelve months after the completion of the market conduct surveillance. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1563, § 10, effective January 1, 2018. 10-1-305. Market conduct examinations. (1) The commissioner may conduct a market conduct examination of any company as often as the commissioner, in the commissioner's sole discretion, deems appropriate; except that the commissioner shall rely upon the state of domicile to conduct market conduct examinations of those eligible nonadmitted insurers regulated in accordance with article 5 of this title 10. (2) To the extent practicable, the commissioner shall coordinate a market conduct examination of a foreign company authorized under this title 10 to do business in this state with the insurance commissioner of the company's state of domicile. (3) (a) Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least sixty days before starting a market conduct examination, the division shall notify the company that a market conduct examination will be performed. (b) The division shall use the standard data request or a successor or modified product that is substantially similar to the standard data request. (c) At the same time the notice is sent to the company, the division shall provide notice on the NAIC's examination tracking system or successor NAIC product that a market conduct examination has been scheduled. (4) (a) Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least thirty days before starting the market conduct examination, the division shall offer, in writing, to conduct a preexamination conference with the company's examination coordinator and key personnel to discuss: (I) Early resolution and simplification of procedures; (II) Avoidance of the production of unnecessary or duplicative information; and (III) Facilitation of complete, accurate, just, speedy, and inexpensive disposition of the examination. (b) Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least thirty days before starting the market conduct examination, the division shall prepare and provide to the company subject to the examination a work plan consisting of the following: (I) The name and address of the company being examined; Colorado Revised Statutes 2019 Page 45 of 943 Uncertified Printout (II) The name and contact information of the market conduct surveillance personnel who will be conducting the examination; (III) The type of market conduct examination being conducted; (IV) The scope of the examination; (V) The date the examination is scheduled to begin; (VI) A time estimate for the duration of the examination; and (VII) An estimated cost for the examination. (c) If a market conduct examination is expanded beyond the scope provided to the company in the work plan, the division shall: (I) Provide written notice to the company explaining the extent of and reasons for the expansion; and (II) Provide the company with a revised work plan as soon as practicable. (5) Before concluding a market conduct examination, the division shall offer, in writing, to hold a predraft conference with the company subject to the examination at least thirty days before filing a draft report. If the company chooses to have a predraft conference, the division shall design and conduct the predraft conference in accordance with the examination report provisions of the Market Regulation Handbook to facilitate: (a) Resolution of outstanding issues; (b) Discussion of possible corrective actions; (c) Review of the examination report before it is filed in draft form; and (d) Complete, accurate, just, speedy, and inexpensive conclusion of the examination. (6) (a) The division shall adhere to the following procedure or timeline, unless a mutual agreement is reached with the company to modify the procedure or timeline: (I) The division shall deliver the draft report to the company within sixty days after completion of the market conduct examination, which is the date when the division confirms in writing that the examination is completed. (II) The company may respond with written submissions or rebuttals challenging any issue contained in the draft report within thirty days after the date of the draft report. Any issue in the draft report that is not challenged by the company is deemed accepted by the company. The company's written submissions and rebuttals must be included in the market conduct surveillance personnel's work papers. (III) Unless a mutual agreement is reached to extend the deadline, within thirty days after the period allowed for the company's written submissions or rebuttals ends, the division shall provide to the company a final report. The division shall not include any issues in the final report that were not included in the draft report without providing the company an opportunity to supplement its submissions and rebuttals in order to respond to any new issue. The company must file any supplement to its submissions and rebuttals within fourteen days after the division issues the final report. (IV) Within thirty days after issuance of the final report, the company must accept the findings of the final report or request a written hearing. (b) If the company accepts the findings of the final report, the following procedures apply: (I) The commissioner shall issue an order adopting the final report as written or with specified modifications or corrections within thirty days after the company accepts the report. Colorado Revised Statutes 2019 Page 46 of 943 Uncertified Printout (II) (A) The commissioner shall include with an order issued pursuant to subsection (6)(b)(I) of this section findings and conclusions resulting from the commissioner's consideration and review of the final report, relevant market conduct surveillance personnel work papers, and any written submissions or rebuttals. (B) An order issued pursuant to subsection (6)(b)(I) of this section is a final agency action and shall be served upon the company by certified mail together with a copy of the adopted final report. Within sixty days after issuance of the adopted final report, the company shall file affidavits executed by each of its directors stating under oath that the directors have received a copy of the final report and related orders. (III) Notwithstanding the requirements of section 10-1-127, if the final agency order modifies or corrects the final report accepted by the company, the company may appeal the modified or corrected portions of the final agency order, including the penalty or all or part of any fine or civil penalty imposed in the order, to the district court pursuant to section 24-4-106. In the absence of any modification or corrections to the final report accepted by the company, the company does not have a right to judicial review of the final agency action adopted by the commissioner except for the right to appeal the penalty or all or part of any fine or civil penalty imposed in the order to the district court pursuant to section 24-4-106. (c) If the company requests a written hearing, the following procedures apply: (I) The company must request the written hearing in writing and must specify the issues in the final report that the company is challenging. The company is limited to challenging the issues that were previously challenged in the company's written submission and rebuttal or supplemental submission and rebuttal as provided pursuant to subsections (6)(a)(II) and (6)(a)(III) of this section. (II) The hearing shall be conducted by written arguments submitted to the commissioner. (III) Discovery is limited to the market conduct surveillance personnel's work papers that are relevant to the issues the company is challenging. The relevant market conduct surveillance personnel's work papers are deemed admitted and included in the record. No other forms of discovery, including depositions and interrogatories, are allowed, except upon the written agreement of the company and the division. (IV) Only the company and the division may submit written arguments. (V) The company must submit its written argument within thirty days after it requests the hearing. (VI) The division shall submit its written response within thirty days after the end of the period allowed for the company to submit its written argument. (VII) The commissioner shall issue a decision accompanied by findings and conclusions resulting from the commissioner's consideration and review of the written arguments, the final report, relevant market conduct surveillance personnel work papers, and any written submissions or rebuttals. The commissioner's order is a final agency action and shall be served upon the company by certified mail together with a copy of the final report. Unless the effective date of the final agency order is postponed pursuant to section 24-4-106 (5), within sixty days after issuance of the final agency order, the company shall file affidavits executed by each of its directors stating under oath that the directors have received a copy of the final report and related orders. (VIII) Any portion of the final report that is not or cannot be challenged by the company is incorporated into the decision of the commissioner. Colorado Revised Statutes 2019 Page 47 of 943 Uncertified Printout (IX) Notwithstanding the requirements of section 10-1-127, the commissioner's decision is a final agency action appealable to the district court pursuant to section 24-4-106. (7) Findings of fact and conclusions of law in the commissioner's final agency action are prima facie evidence in any legal or regulatory action. (8) (a) The commissioner shall continue to hold the content of any final agency action of a market conduct examination as private and confidential for a period of forty-nine days after the final agency action. After the forty-nine-day period expires, the commissioner shall open the final agency action for public inspection if a court of competent jurisdiction has not stayed its publication. (b) Nothing in this part 3 prevents the commissioner from disclosing the content of an examination report, preliminary examination report, or results, or any matter relating to a report or results, to the division or to the insurance division of any other state or agency or office of the federal government at any time if the division, agency, or office receiving the report or related matters agrees and has the legal authority to hold it confidential in a manner consistent with this part 3. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1565, § 10, effective January 1, 2018. 10-1-306. Market conduct surveillance personnel. (1) Market conduct surveillance personnel must be qualified by education, experience, and, where applicable, professional designations. The commissioner may supplement the in-house market conduct surveillance staff with qualified outside professional assistance if the commissioner determines that outside assistance is necessary. (2) The commissioner shall not appoint market conduct surveillance personnel who, either directly or indirectly, have a conflict of interest or are affiliated with the management of or own a pecuniary interest in any person subject to any type of market conduct surveillance under this part 3; except that this section does not preclude market conduct surveillance personnel from being: (a) A policyholder or claimant under an insurance policy; (b) A grantor of a mortgage or similar instrument on the market conduct surveillance employee's residence to a regulated entity if done under customary terms and in the ordinary course of business; (c) An investment owner in shares of regulated diversified investment companies; or (d) A settlor or beneficiary of a blind trust into which any otherwise impermissible holdings have been placed. (3) Notwithstanding any provision of this section to the contrary, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or similar individuals who are independently practicing their professions even though those individuals may from time to time be similarly employed or retained by companies subject to market conduct surveillance under this part 3. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1569, § 10, effective January 1, 2018. Colorado Revised Statutes 2019 Page 48 of 943 Uncertified Printout 10-1-307. Immunity from liability - prohibited activity. (1) A cause of action does not arise, and liability shall not be imposed, against the commissioner, the commissioner's authorized representatives, or any market conduct surveillance personnel employed or appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this part 3. (2) A cause of action does not arise, and liability shall not be imposed, against any person for communicating or delivering information or data to the commissioner, the commissioner's authorized representative, or any market conduct surveillance personnel pursuant to a market conduct surveillance performed under this part 3, if the communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. (3) This section does not abrogate or modify any common-law or statutory privilege or immunity enjoyed by any person identified in subsection (1) of this section. (4) A person identified in subsection (1) of this section is entitled to an award of attorney fees and costs if the person is the prevailing party in a civil action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this part 3, and the party bringing the action was not substantially justified in bringing the action. For purposes of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated. (5) (a) A company shall not take any retaliatory personnel action against an employee because the employee provides information pursuant to any type of market conduct surveillance examining the practices of the company. (b) An employee who has been the subject of a retaliatory personnel action in violation of subsection (5)(a) of this section may institute a civil action in a court of competent jurisdiction for relief within one year after learning of the alleged retaliatory action. (c) A court of competent jurisdiction may order relief as follows: (I) Reinstatement of the employee to the same position held before the retaliatory personnel action or to an equivalent position; (II) Reinstatement of full benefits and seniority rights; and (III) Compensation for lost wages and benefits. (d) Upon a determination that a company has taken a retaliatory personnel action, the court may award costs of the action together with reasonable attorney fees. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1570, § 10, effective January 1, 2018. 10-1-308. Rules. In accordance with article 4 of title 24, the commissioner may promulgate reasonable rules that are necessary or proper for implementing and administering this part 3, including rules necessary to align state law with the requirements for accreditation set forth by the NAIC. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1571, § 10, effective January 1, 2018. Colorado Revised Statutes 2019 Page 49 of 943 Uncertified Printout 10-1-309. Confidentiality requirements. (1) (a) Market conduct surveillance personnel have free and full access to the following documents of and persons associated with the company during regular business hours: (I) Books; (II) Records, including any self-evaluation or voluntary compliance program documents; (III) Employees; (IV) Officers; and (V) Directors. (b) Upon request of market conduct surveillance personnel, a company utilizing a thirdparty model or product for any of the activities being reviewed shall make the details of the models or products available to the personnel. (c) (I) The commissioner and any other person in the course of market conduct surveillance shall keep confidential all documents, including working papers, third-party models or products, complaint logs, and copies of any documents created, produced, obtained by, or disclosed to the commissioner, market conduct surveillance personnel, or any other person in the course of market conduct surveillance conducted pursuant to this part 3, and all documents obtained by the NAIC as a result of this part 3. The documents remain confidential beyond the termination of the market conduct surveillance, are not subject to subpoena, and must not be made public at any time or used by the commissioner or any other person, except as provided in subsections (2), (3), and (5) of this section and section 10-1-312. (II) The commissioner, the division, and any other person in the course of market conduct surveillance shall keep confidential any self-evaluation or voluntary compliance program documents disclosed to the commissioner or other person by a company and the data collected via the NAIC market conduct annual statement. The documents are not subject to subpoena and shall not be made public or used by the commissioner or any other person, except as provided in subsections (2), (3), and (5) of this section and section 10-1-312. (2) Notwithstanding subsection (1) of this section, and consistent with subsection (3) of this section, in order to assist in the performance of the commissioner's duties, the commissioner may: (a) Share documents, materials, communications, or other information, including the confidential and privileged documents, materials, or information specified in subsection (1) of this section, with other state, federal, and international regulatory agencies and law enforcement authorities and the NAIC, its affiliates, and subsidiaries, if the recipient agrees to and has the legal authority to maintain the confidentiality and privileged status of the document, material, communication, or other information; (b) Receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, communication, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, communication, or information; and (c) Enter into agreements governing the sharing and use of information consistent with this section. (3) Nothing in this part 3 limits: Colorado Revised Statutes 2019 Page 50 of 943 Uncertified Printout (a) The commissioner's authority to use, if consistent with section 10-3-414, any final or preliminary examination report, any market conduct surveillance or company work papers or other documents, or any other information discovered or developed during the course of any market conduct surveillance, in the furtherance of any legal or regulatory action initiated by the commissioner that the commissioner may, in the commissioner's sole discretion, deem appropriate; or (b) The ability of a company to conduct discovery in accordance with section 10-1-305 (6)(c)(III). (4) Disclosure to the commissioner of documents, materials, communications, or information required as part of any type of market conduct surveillance does not waive any applicable privilege or claim of confidentiality in the documents, materials, communications, or information. (5) Notwithstanding the confidentiality requirements in subsection (1)(c) of this section, when the commissioner performs any type of market conduct surveillance that does not rise to the level of a market conduct examination, the commissioner may make the final results of the market conduct surveillance, in an aggregated format, available for public inspection in a manner deemed appropriate by the commissioner. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1571, § 10, effective January 1, 2018. 10-1-310. Fines and penalties. (1) As a result of any market conduct surveillance, the commissioner may order a monetary penalty of up to three thousand dollars for every act in violation of any law, rule, or prior lawful order of the commissioner, not to exceed an aggregate penalty of thirty thousand dollars for every act or violation. If the company knew or reasonably should have known that its conduct was in violation of any law, rule, or prior lawful order of the commissioner, the commissioner may order a penalty of up to thirty thousand dollars for every act or violation, not to exceed an aggregate penalty of two hundred thousand dollars in any one calendar year. (2) The commissioner shall ensure that fines and penalties levied as a result of market conduct surveillance or other action enforcing this part 3 are consistent, reasonable, and justified. Every fine or penalty must relate to the general business practices and compliance activities of insurers and not to clearly infrequent or unintentional random errors that do not cause significant consumer harm. (3) When determining the appropriate civil penalty for a company and whether to stay any portion of the civil penalty, the commissioner shall consider: (a) Actions taken by the company to maintain membership in, and comply with the standards of, best-practice organizations that promote high ethical standards of conduct in the marketplace; (b) The extent to which the company maintains regulatory compliance programs to selfassess, self-report, and remediate problems detected; and (c) Regulatory compliance programs or corrective actions that a company has instituted voluntarily prior to or during the pendency of any market conduct surveillance in order to remedy violations. Colorado Revised Statutes 2019 Page 51 of 943 Uncertified Printout (4) If the commissioner stays any portion of the civil penalty, the commissioner may reinstate the full civil penalty, and may impose additional penalties, if the company fails to remedy the violations. (5) The commissioner shall include in the final agency order the civil penalty amount per violation for every act in violation of any law, rule, or prior lawful order of the commissioner. Source: L. 2017: (2) amended, (SB 17-249), ch. 283, p. 1544, § 4, effective September 1; entire part added, (HB 17-1231), ch. 284, p. 1573, § 10, effective January 1, 2018. Editor's note: Section 23 of chapter 283 (SB 17-249), Session Laws of Colorado 2017, provides that the act changing this section takes effect only if HB 17-1231 becomes law. HB 171231 became law and took effect January 1, 2018. 10-1-311. Participation in national market conduct databases. (1) The commissioner shall report market data to the NAIC's market information systems, including the complaint database system, the examination tracking system, and the regulatory information retrieval system, or other successor NAIC products as determined by the commissioner. (2) (a) The commissioner shall report complaints to the NAIC complaint database system, or its successor product, in accordance with NAIC guidelines. However, before publication of company-specific complaint information by the commissioner, insurance industry personnel shall be given the opportunity to review Colorado-specific complaints assigned to their company in the commissioner's complaints database and request that corrections be made to the data. The commissioner shall review company objections to assigned complaints before publishing company-specific complaints information and shall make corrections to the commissioner's complaints database when appropriate. If the commissioner makes corrections to its complaints database based on errors identified by a company, the commissioner shall send corrected data to the NAIC complaint database system, or its successor product. (b) The commissioner shall ensure that companies have until at least February 15 to review complaints data for the immediately preceding calendar year. In order for a company's objections to its complaints data information to be considered, the company must review and request any corrections to the prior calendar year's complaints data no later than February 15. (3) Information maintained by the commissioner shall be compiled in a manner that meets the requirements of the NAIC. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1574, § 10, effective January 1, 2018. 10-1-312. Coordination with other states through NAIC. (1) The commissioner may share information and coordinate the commissioner's market surveillance efforts with other states through the NAIC. (2) Consistent with section 10-1-309, in order to assist in the performance of the commissioner's duties, the commissioner may: (a) Share documents, materials, communications, or other information, including the confidential and privileged documents, materials, or information subject to section 10-1-309 (1), with other state, federal, and international regulatory agencies and law enforcement authorities Colorado Revised Statutes 2019 Page 52 of 943 Uncertified Printout and the NAIC, its affiliates, and subsidiaries, if the recipient agrees to and has the legal authority to maintain the confidentiality and privileged status of the document, material, communication, or other information; (b) Receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, communication, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, communication, or information; and (c) Enter into agreements governing the sharing and use of information consistent with this section. Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1574, § 10, effective January 1, 2018. LICENSES ARTICLE 2 Licenses Editor's note: (1) This article was numbered as articles 1 and 32 of chapter 72, C.R.S. 1963. Part 2 of this article was repealed and reenacted in 1977 and the substantive provisions of this article were repealed and reenacted in 1993, effective January 1, 1995, resulting in the addition, relocation, and elimination of sections as well as subject matter. For amendments to this article prior to 1993, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume. Former C.R.S. section numbers, prior to 1993, are shown in editor's notes following those sections that were relocated. (2) The effective date and applicability for this article are contained in § 10-2-1101. Cross references: For an alternative disciplinary action that may be imposed upon persons licensed pursuant to this article, see § 24-34-106. PART 1 GENERAL PROVISIONS 10-2-101. Short title. This article shall be known and may be cited as the "Colorado Producer Licensing Model Act". Source: L. 93: Entire article R&RE, p. 1348, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1190, § 1, effective January 1, 2002. Colorado Revised Statutes 2019 Page 53 of 943 Uncertified Printout 10-2-102. Scope - applicability. This article governs the qualifications and procedures for the licensing of insurance producers. This article is intended to simplify and organize some statutory language to improve efficiency, permit the use of new technology, and reduce costs associated with issuing, continuing, and renewing insurance licenses. Source: L. 93: Entire article R&RE, p. 1348, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1190, § 2, effective January 1, 2002. Editor's note: This section is similar to former § 10-2-201 as it existed prior to 1993. 10-2-103. Definitions. As used in this article, unless the context otherwise requires: (1) "Catastrophic disaster" means an event, as declared by the president of the United States or the governor, or both, which results in large numbers of deaths or injuries; causes extensive damage or destruction of property or facilities that provide and sustain human needs; produces an overwhelming demand on state and local response resources and mechanisms; causes a severe long-term effect on general economic activity; or severely affects state, local, and private sector capabilities to begin and sustain response activities. (1.5) "Commissioner" means the commissioner of insurance. (2) "Health coverage" means accident and health or sickness and accident policies or contracts including other health coverages provided by insurers, health maintenance organizations, or nonprofit hospital and surgical plans. (2.5) "Home state" means the District of Columbia and any state or territory of the United States in which an insurance producer meets the following: (a) Maintains the producer's principal place of residence or principal place of business; and (b) Is licensed to act as an insurance producer. (3) "Individual" means any private or natural person as distinguished from a partnership, corporation, association, or any foreign or domestic entity as defined in section 7-90-102, C.R.S. (4) "Insurance" means any of the lines of authority set forth in section 10-2-407 (1). (5) "Insurance agency" or "business entity" means a corporation, partnership, association, or foreign or domestic entity as defined in section 7-90-102, C.R.S., or other legal entity that transacts the business of insurance. (6) "Insurance producer" or "producer", except as otherwise provided in section 10-2105, means: (a) A person who solicits, negotiates, effects, procures, delivers, renews, continues, or binds: (I) Policies of insurance for risks residing, located, or to be performed in this state; (II) Membership in a prepayment plan as defined in parts 2 and 3 of article 16 of this title; or (III) Membership enrollment in a health care plan as defined in part 4 of article 16 of this title; and (b) A public adjuster. (6.5) "Insurer" means every person engaged as principal, indemnitor, surety, or contractor in the business of making contracts of insurance. Colorado Revised Statutes 2019 Page 54 of 943 Uncertified Printout (7) "License" means a document issued by the commissioner that authorizes a person to act as an insurance producer for the lines of authority, specified in such document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier to a binding agreement. (7.1) "Limited line insurance" means those lines of authority other than those defined in section 10-2-407 (1)(a) to (1)(e) or any other line of insurance that the commissioner may deem necessary to recognize for the purpose of complying with section 10-2-502. (7.3) "Limited line producer" means a person authorized by the commissioner to sell, solicit, or negotiate limited lines of insurance. (7.5) "Limited lines credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing the insured credit obligation that the commissioner determines should be designated a form of limited line credit insurance. (7.7) "Limited lines credit insurance producer" means a person who sells, solicits, or negotiates one or more forms of limited lines credit insurance coverage to individuals through a master, corporate, group, or individual policy. (7.9) "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers or acts as a public adjuster. (8) "Person" includes any individual or a business entity. (8.5) "Public adjuster" means any person who, for compensation or any other thing of value on behalf of the insured: (a) Acts or aids, solely in relation to first-party claims arising under insurance contracts that insure the real or personal property or allied lines of the insured, on behalf of an insured in negotiating for, or effecting, the settlement of a claim for loss or damage covered by an insurance contract; (b) Advertises for employment as a public adjuster of insurance claims or solicits business or represents himself or herself to the public as a public adjuster of first-party insurance claims for losses or damages arising out of policies of insurance that insure real or personal property or allied lines; or (c) Directly or indirectly solicits business, investigates or adjusts losses, or advises an insured about first-party claims for losses or damages arising out of policies of insurance that insure real or personal property or allied lines for another person engaged in the business of adjusting losses or damages covered by an insurance policy for the insured. (9) (Deleted by amendment, L. 2001, p. 1190, § 3, effective January 1, 2002.) (10) "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. (11) "Solicit" means attempting to sell insurance, asking or urging a person to apply for a particular kind of insurance from a particular company, or asking or urging a person to use the services of, or services in connection with activities as, a public adjuster. (12) "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance. Colorado Revised Statutes 2019 Page 55 of 943 Uncertified Printout (13) "Uniform business entity application" means the current version of the national association of insurance commissioners' uniform business entity application for resident and nonresident business entities. (14) "Uniform application" means the current version of the national association of insurance commissioners' uniform application for resident and nonresident producer licensing. Source: L. 93: Entire article R&RE, p. 1348, § 1, effective January 1, 1995. L. 2001: (2.5), (6.5), (7.1), (7.3), (7.5), (7.7), (7.9), (10), (11), (12), (13), and (14) added and (3), (4), (5), (7), (8), and (9) amended, p. 1190, § 3, effective January 1, 2002. L. 2009: (7.1), (7.3), (7.5), and (7.7) amended, (SB 09-292), ch. 369, p. 1940, § 10, effective August 5. L. 2013: (1), (6), (7.9), and (11) amended and (1.5) and (8.5) added, (HB 13-1062), ch. 61, p. 200, § 1, effective January 1, 2014. Editor's note: This section is similar to former §§ 10-2-102 and 10-2-202 as they existed prior to 1993. 10-2-104. Authority of commissioner - rules. Pursuant to the provisions of article 4 of title 24, C.R.S., the commissioner may promulgate reasonable rules for the implementation and administration of the provisions of this article. The commissioner may contract with any party for the purpose of performing any ministerial duty required of the commissioner under this article. All reasonable charges and expenses of such contractors shall be paid directly to the contractors by licensees. Source: L. 93: Entire article R&RE, p. 1349, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1192, § 4, effective January 1, 2002. Editor's note: This section is similar to former § 10-2-220 as it existed prior to 1993. 10-2-105. Insurance producer - exemptions from definition. (1) Nothing in this article shall be construed to require an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries, or affiliates. (2) Notwithstanding section 10-2-103 (6), "insurance producer" does not include the following: (a) Any person who is a regularly salaried officer, director, or employee of an insurance company or an insurance producer and who is engaged in the performance of usual or customary executive, administrative, or clerical duties which do not include the negotiation or solicitation of insurance, so long as the officer, director, or employee does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this state; (b) Any person who is a salaried employee in the office of an insurance producer or insurer and who devotes full time to clerical and administrative services, including the incidental taking of insurance applications and receipt of premiums in the office of such person's employer, so long as the person does not receive any commission on such applications and the person's compensation is not varied by the volume of applications or premiums taken or received; Colorado Revised Statutes 2019 Page 56 of 943 Uncertified Printout (c) An officer, director, or employee whose activities are executive, administrative, managerial, clerical, or a combination of these, and are only indirectly related to the sale, solicitation, or negotiation of insurance; (c.3) An officer, director, or employee whose function relates to underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance; (c.5) An officer, director, or employee who is acting in the capacity of a special agent or agency supervisor assisting insurance producers, where the officer's, director's, or employee's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation, or negotiation of insurance; (c.7) A person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, or group or blanket accident and health insurance or for the purpose of enrolling individuals under plans, issuing certificates under plans, or otherwise assisting in administering plans or performs administrative services related to mass marketed property and casualty insurance, where no commission is paid to the person for the service; (d) Employers, associations, or their officers, directors, or employees, or the trustees of any employee trust plan, to the extent that such employers, associations, officers, directors, employees, or trustees are engaged in the administration or operation of any program of employee benefits for their own employees or the employees of their subsidiaries or affiliates, which program involves the use of insurance issued by an insurer; except that such employers, associations, officers, directors, employees, or trustees shall not in any manner be compensated, directly or indirectly, by the company issuing the contracts; (e) Employees of insurers or insurance agencies or organizations employed by insurers or insurance agencies who are engaging in the inspection, rating, or classification of risks or in the supervision of the training of insurance producers and who are not individually engaged in the solicitation or negotiation of policies or contracts for insurance; (f) Management associations, partnerships, or corporations whose operations do not entail solicitation of insurance from the public; (g) Officers or employees of a motor vehicle rental company that offers coverage in connection with and incidental to the rental of motor vehicles under motor vehicle rental agreements, so long as such coverage is: (I) Offered at the point of the rental transaction or by preselection of coverage in master, corporate, group, or individual rental agreements; (II) Limited in scope to the parties to such motor vehicle rental agreements and to other authorized drivers or occupants of the vehicles being rented; (III) Limited in duration to coverage of damages incurred as a result of events occurring during the rental period; and (IV) For traditionally recognized risks associated with motor vehicle operation and travel, including, without limitation, personal injury or death, personal liability and property damage, collision, damage to or loss of personal effects, roadside assistance, and emergency repairs; (h) A person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, so long as the Colorado Revised Statutes 2019 Page 57 of 943 Uncertified Printout person does not sell, solicit, or negotiate insurance that would insure risks residing, located, or to be performed in this state; (i) A person who is not a resident of this state who sells, solicits, or negotiates a contract of insurance, for commercial property and casualty risks, to an insured with risks located in more than one state insured under that contract, so long as the person is otherwise licensed as an insurance producer to sell, solicit, or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; or (j) A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer, so long as the employee does not sell or solicit insurance or receive a commission. (2.5) With respect to public adjusters, a license as a public adjuster is not required for: (a) An attorney-at-law admitted to practice in this state, when acting in his or her professional capacity as an attorney; (b) A person who negotiates or settles claims arising under a life or health insurance policy or an annuity contract; (c) A person employed only for the purpose of obtaining facts surrounding a loss or furnishing technical assistance of an incidental nature to a licensed public adjuster, including a photographer, estimator, private investigator, engineer, or handwriting expert; (d) A licensed health care provider, or employee of a licensed health care provider, who prepares or files a health claim form on behalf of a patient; or (e) A person who settles subrogation claims between insurers. Source: L. 93: Entire article R&RE, p. 1350, § 1, effective January 1, 1995. L. 98: (1)(g) added, p. 234, § 3, effective April 10. L. 2001: Entire section amended, p. 1192, § 5, effective January 1, 2002. L. 2013: (2.5) added, (HB 13-1062), ch. 61, p. 201, § 2, effective January 1, 2014. Editor's note: This section is similar to former § 10-2-209 as it existed prior to 1993. Cross references: For the legislative declaration contained in the 1998 act enacting subsection (1)(g), see section 1 of chapter 88, Session Laws of Colorado 1998. PART 2 PRELICENSURE EDUCATION 10-2-201. Prelicensure education - when required. (1) (a) Except as otherwise provided in section 10-2-202, in addition to other requirements for licensure as specified under this article and as a condition of initial licensure, an individual applicant for qualification in life, sickness and accident, or property and casualty lines shall be required to provide evidence to the commissioner that the individual applicant has satisfactorily completed an approved prelicensure education or training course or program as follows: (I) An individual seeking insurance producer licensure authority for life insurance shall complete at least fifty hours of an approved course or program for certification in life insurance; Colorado Revised Statutes 2019 Page 58 of 943 Uncertified Printout and, of the said fifty hours, at least three hours shall pertain specifically to insurance industry ethics; (II) An individual seeking insurance producer licensure authority for health coverage shall complete at least fifty hours of an approved course or program for certification in sickness and accident insurance; and, of the said fifty hours, at least three hours shall pertain specifically to insurance industry ethics; (III) An individual seeking insurance producer licensure authority for property or casualty insurance or both shall complete at least fifty hours of an approved course or program for certification in property or casualty insurance or both; and, of the said fifty hours, at least three hours shall pertain specifically to insurance industry ethics. (b) An individual seeking an insurance producer license to include life, sickness and accident, property, or casualty lines or any combination thereof shall not be eligible to take the written examination provided for in section 10-2-402 until the prelicensure education requirements specified in this subsection (1) pertaining to the line or lines of insurance applied for have been satisfied. (2) The commissioner shall adopt all rules necessary to carry out the prelicensing education provisions of this section. Such rules shall set forth standards for courses and programs to qualify for approval by the commissioner and shall also prescribe a system of control and reporting. (3) An individual seeking an insurance producer license shall pay to the commissioner, in addition to any other applicable fees or charges, a fee established by the commissioner in accordance with section 10-2-413 for operation of the prelicensing education program. Source: L. 93: Entire article R&RE, p. 1350, § 1, effective January 1, 1995. 10-2-202. Exemption from prelicensure education requirements. (1) Prelicensure education as set forth in section 10-2-201 shall not be required of an individual who is: (a) Applying to reinstate a cancelled or expired resident insurance producer license in this state when such license has been inactive for one year or less; (b) Applying for temporary license authority under section 10-2-410; (c) Applying for a resident insurance producer license in this state, was previously licensed in his or her former resident state, and has completed or satisfied prelicensure education as required by that state pertinent to the line or lines of insurance applied for in Colorado; (d) Applying for a nonresident license in this state pertinent to the line or lines of authority held in the producer's home state. Source: L. 93: Entire article R&RE, p. 1351, § 1, effective January 1, 1995. L. 2001: (1)(d) amended, p. 1194, § 6, effective January 1, 2002. 10-2-203. Course certification, registration, and review by commissioner. (1) Prelicensure education courses or programs that will be provided and offered to persons applying for life, sickness and accident, property, or casualty licensing are subject to review and certification by the commissioner, except that: Colorado Revised Statutes 2019 Page 59 of 943 Uncertified Printout (a) Any full-time program of prelicensure education operated by a qualified domestic company or a company with a qualified home office located in Colorado shall not be subject to review and certification by the commissioner; and (b) Any applicant or licensee who has attended such a course or program shall be deemed in compliance with the provisions of section 10-2-201 upon certification by the applicant that he or she has completed all required hours of instruction through such a course or program. (2) Course instruction, content, outline, and course instructors are subject to initial approval by the commissioner and, at the discretion of the commissioner, are also subject to periodic review for continuation. The course provider shall remit the fee as prescribed in accordance with section 10-2-413 to continue or renew such approved course or program. (3) If, upon review, the commissioner finds that a prelicensure education course or program is not in compliance with all applicable standards, as set forth by rule, the commissioner may order the course or program to be discontinued or revoke the approval of the course provider or both. Source: L. 93: Entire article R&RE, p. 1352, § 1, effective January 1, 1995. PART 3 CONTINUING EDUCATION Cross references: For current provisions of the "Reinsurance Intermediary Act" previously located in this part 3, see part 9 of this article 2. 10-2-301. Continuing education requirement - rules. (1) Producers not exempt from the requirements of this section shall satisfactorily complete up to twenty-four hours of instruction by attending courses or programs of instruction approved by the commissioner. At least three of the twenty-four hours of continuing education must be for courses in ethics. For producers authorized to sell property or personal insurance lines of business, at least three of the twenty-four hours of continuing education must be for courses in homeowner's insurance coverage. The commissioner may adopt rules concerning testing requirements as a part of the certified continuing education. The producer shall complete the required hours of instruction within twenty-four months after the date the producer's license renews, beginning with renewal dates on or after January 1, 1993. A producer may accumulate no more than twelve carry-over credit hours during the one hundred twenty days before the licensing continuation date. Carryover credits apply to the next continuing education period. If a producer has more than one license to sell insurance in this state, the producer shall complete the required hours of instruction within twenty-four months after the date of renewal of the first license. For good cause shown, the commissioner may grant an extension of time, not exceeding one additional year, within which to comply with this section. An instructor of an approved course of instruction qualifies for the same number of hours of continuing education as a person attending and successfully completing the course or program, but an instructor shall not receive credit more than once for a course or program given more than once during the twenty-four-month period described in this subsection (1). Colorado Revised Statutes 2019 Page 60 of 943 Uncertified Printout (2) Any producer who is subject to the requirements of this section shall furnish in a form satisfactory to the commissioner written proof of compliance with the requirements of this section. The requirements of this section are mandatory for any person specified in subsection (3)(a) of this section, and if any such person holds more than one license which is described in subsection (3) of this section, such person shall be required to complete the hours of instruction required under this section only once. For purposes of this section, the term "person" shall include any holder of a license to sell insurance under the laws of this state. (3) (a) The requirements of this section shall apply to any resident person licensed to solicit and sell the following types of insurance in this state: (I) Life insurance and annuity contracts, including variable life and annuity contracts; (II) Sickness, accident and health insurance; (III) Property and casualty insurance; and (IV) Any other type of insurance for which the state requires an examination for licensure. (b) This section shall not apply to any person holding a limited or restricted license if such license is in good standing with the division and no complaints have been filed against the licensee. (3.5) (a) An individual who holds a public adjuster license and who is not exempt under paragraph (b) of this subsection (3.5) shall satisfactorily complete continuing education courses as required by the commissioner under this section. (b) Licensees holding nonresident public adjuster licenses who have met the continuing education requirements of their home state and whose home state gives credit to residents of this state on the same basis meet the requirements of this section. (4) Written certification of any course of instruction completed shall be executed by or on behalf of the sponsoring organization, in a form satisfactory to the commissioner. (5) Any person who fails to comply with the requirements of this section, or is found after a hearing before the division to have submitted a false or fraudulent certificate of compliance to the commissioner, shall have his or her license suspended until such person satisfactorily demonstrates to the commissioner that all of the requirements of this section, and any other applicable licensing requirement or other statute, have been met. (6) (a) The commissioner shall be responsible for administering the continuing insurance education requirements under this article and approving courses of instruction that qualify for such purposes. The commissioner shall promulgate such rules as the commissioner deems necessary to administer the continuing education requirements, including the provisions and requirements of this section. The commissioner shall also promulgate rules requiring that producers be required to provide to a continuing education administrator proof of compliance with the continuing education requirements as a condition of license renewal. For persons licensed pursuant to section 10-11-116 (1)(c), compliance with the continuing legal education credits requirements of the Colorado supreme court shall be deemed to meet the requirements of this section. (b) The position of continuing education administrator shall be established by the commissioner either within the division of insurance or through a contractual arrangement with an outside service provider. All costs of such administrator shall be paid from continuing insurance education fees paid by producers in the manner provided by this section. In no event Colorado Revised Statutes 2019 Page 61 of 943 Uncertified Printout may the commissioner delegate course approval responsibilities to the continuing education administrator. (c) Each producer licensed under this article is responsible for paying to the continuing education administrator a reasonable biennial fee for the operation of the continuing education programs, which fee is used to administer the provisions of this section. (6.5) (a) Continuing education course instruction, content, outline, and course providers are subject to initial approval by the commissioner and, at the discretion of the commissioner, are subject to periodic review for continuation. (b) If, upon review, the commissioner determines that a continuing education course or program is not in compliance with all applicable standards, as set forth by rule, the commissioner may order the course or program to be discontinued or revoke approval of the course provider, or both. (7) Repealed. Source: L. 93: Entire article R&RE, p. 1352, § 1, effective January 1, 1995. L. 94: (3)(b), (5), and (6)(b) amended, p. 1628, § 22, effective January 1, 1995. L. 95: (6.5) added, p. 89, § 1, effective March 30; (6)(a) and (6)(c) amended, p. 288, § 13, effective July 1. L. 99: (7) repealed, p. 104, § 1, effective March 24. L. 2001: (3) amended, p. 1195, § 7, effective January 1, 2002. L. 2004: (1) amended, p. 979, § 2, effective August 4. L. 2012: (6)(a) and (6)(c) amended, (HB 12-1266), ch. 280, p. 1494, § 8, effective July 1. L. 2013: (1) amended, (HB 131225), ch. 183, p. 676, § 4, effective January 1, 2014; (3.5) added, (HB 13-1062), ch. 61, p. 202, § 3, effective January 1, 2014. Editor's note: This section is similar to former § 10-2-207.5 as it existed prior to 1993. Cross references: In 2013, subsection (1) was amended by the "Homeowner's Insurance Reform Act of 2013". For the short title, see section 1 of chapter 183, Session Laws of Colorado 2013. PART 4 LICENSING AND APPOINTMENT OF INSURANCE PRODUCERS Cross references: For current provisions of the "Managing General Agents Act" previously located in this part 4, see part 10 of this article 2. 10-2-401. License required. (1) No person shall act as or hold oneself out to be an insurance producer unless duly licensed as an insurance producer in accordance with this article. Every insurance producer who solicits or negotiates an application for insurance of any kind on behalf of an insurer shall be regarded as representing the insurer and not the insured or any beneficiary of the insured in any controversy between the insurer and such insured or beneficiary. A person shall not sell, solicit, or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with this article. Colorado Revised Statutes 2019 Page 62 of 943 Uncertified Printout (2) No insurance producer shall make application for, procure, negotiate for, or place for others any policies for any line or lines of insurance for which he or she is not then qualified and licensed. (3) (a) Any representative of a fraternal benefit society who solicits and negotiates insurance contracts is an insurance producer and is subject to the same licensing requirements as those for an insurance producer; except that a license is not required of any officer, employee, or secretary of a fraternal benefit society or of a subordinate lodge or branch thereof who devotes substantially all of his or her time to activities other than the solicitation or negotiation of insurance contracts and who receives no commission or other compensation directly dependent upon the number or amount of insurance contracts solicited or negotiated. (b) Any agent, representative, or member of a fraternal benefit society who in the preceding calendar year solicited and procured life insurance contracts on behalf of any society in a face amount of insurance not exceeding fifty thousand dollars or, in the case of any other kind of insurance that the fraternal benefit society may write, solicited and procured such insurance on behalf of not more than twenty-five individuals, who received no commissions or other compensation therefor, and who does not reasonably expect to exceed soliciting or procuring insurance on behalf of more than twenty-five individuals in the current year, shall be exempt from the licensing requirements for an insurance producer. (4) No insurance producer license shall be granted or extended to any person if the license is being or will be used for the purpose of writing controlled business. As used in this section, "controlled business" means insurance procured or to be procured by or through such person upon: (a) The person's own life, person, property, or risks, or those of his or her spouse; or (b) The life, person, property, or risks of the person's employer or the person's own business. (5) Such a license shall be deemed to have been, or intended to be, used for the purpose of writing controlled business, if during any twelve-month period the aggregate amount of premiums on controlled business would exceed the aggregate amount of premiums on all other insurance business of the applicant or licensee. (6) A title insurance agent and a title insurance company, as defined in section 10-11102 (9) and (10), shall disclose the names of all affiliated business arrangements to which the company or agent is a party at the time of application for a new license, on the continuation due date of an existing license, and upon a change to any identifying information, in a form and manner acceptable to the commissioner. The disclosure shall include the physical location of the affiliated businesses, identify the settlement producer with whom the company or agent is associated, and identify the underwriter of the title insurance business. Source: L. 93: Entire article R&RE, p. 1355, § 1, effective January 1, 1995. L. 94: (3) amended, p. 740, § 1, effective January 1, 1995. L. 2001: (1) amended, p. 1195, § 8, effective January 1, 2002. L. 2006: (6) added, p. 268, § 3, effective July 1. Editor's note: This section is similar to former §§ 10-2-102 and 10-2-204 as they existed prior to 1993. Colorado Revised Statutes 2019 Page 63 of 943 Uncertified Printout Cross references: For the provisions pertaining to fraternal benefit societies, see article 14 of this title. 10-2-402. License examination requirement. (1) Unless exempt pursuant to section 10-2-403, a resident individual applying for an insurance producer license shall pass a written examination. The examination shall reasonably test the individual applicant's minimum acceptable level of competence as to the particular line or lines of authority for which the individual applicant seeks qualification, unless an individual applicant has been licensed as an insurance producer for the same line or lines of authority in another state within the twelve months immediately preceding the date of receipt of application and files with the commissioner a letter of clearance, issued by the public official having supervision of insurance in the applicant's former state of residence, stating the individual held a license for the same line or lines of authority during such twelve-month period and that the license was in good standing. (2) Examination for licensing shall be held at such reasonable times and places as are designated by the commissioner, and such times and places shall be made public. (3) (a) Each individual applying for an examination shall remit a nonrefundable fee as prescribed by the commissioner in accordance with section 10-2-413. (b) The application for examination shall request the applicant to provide the following information: (I) The applicant's name, age, residence address, business address, and mailing address; (II) The name of any required prelicensing course he or she has completed or is in the process of completing; (III) The method by which the applicant intends to qualify for the license if other than completing a prelicensing course; (IV) The highest level of education achieved by the applicant; and (V) The applicant's gender, native language, and race or ethnicity; except that the application shall contain a statement that an applicant is not required to disclose his or her gender, native language, or race or ethnicity, that he or she will not be penalized for not doing so, and that the department will use this information exclusively for research and statistical purposes and to improve the quality and fairness of the examinations. (c) No later than six months after August 5, 2008, and annually thereafter, the commissioner shall prepare and publish a report that summarizes statistical information relating to insurance producer examinations administered during the preceding calendar year. The report shall include the following information for all examinees combined and separately by race or ethnicity, gender, race or ethnicity within gender, education level, and native language: (I) The total number of examinees; (II) The percentage and number of examinees who passed the examination; (III) The mean scaled scores on the examination; and (IV) Standard deviation of scaled scores on the examination. (d) If the commissioner arranges to have the examinations for licensure administered by an independent testing service pursuant to section 10-2-402 (5), the commissioner may provide demographic information to the testing service if the commissioner requires the independent examiner to review and analyze examination results in conjunction with the gender, native language, education level, and race or ethnicity of the examinees. (4) (Deleted by amendment, L. 2001, p. 1195, § 9, effective January 1, 2002.) Colorado Revised Statutes 2019 Page 64 of 943 Uncertified Printout (5) The commissioner shall give, conduct, and grade all examinations, or the commissioner may arrange to have examinations administered and graded by an independent testing service, as specified by contract, in a fair and impartial manner and without discrimination as to individuals examined. The commissioner may arrange for such testing service to recover the cost of the examination from the applicant. (6) There shall be a separate portion of the examination required for each line of insurance which the applicant proposes to transact under the license. (7) (Deleted by amendment, L. 2001, p. 1195, § 9, effective January 1, 2002.) (8) An individual who fails to pass an examination shall remit the required fee and any forms required to retake the failed examination. (9) An individual who fails to appear for a scheduled examination shall remit the required fee and any forms required to reapply to take the examination. (10) Applicants for life, health coverages, property, or casualty examinations shall comply with prelicensure education requirements as prescribed in section 10-2-201 prior to taking the written examination. (11) An insurance producer license issued on or before January 1, 2002, for health maintenance organizations ("HMO") or nonprofits may be renewed or continued until the licensee fails to meet the requirements of this part 4. Source: L. 93: Entire article R&RE, p. 1356, § 1, effective January 1, 1995. L. 97: (5) amended, p. 1616, § 3, effective July 1. L. 2001: (1), (4), and (7) amended and (11) added, p. 1195, § 9, effective January 1, 2002. L. 2008: (11) amended, p. 209, § 2, effective March 26; (3) amended, p. 1515, § 1, effective August 5. Editor's note: This section is similar to former §§ 10-2-106 and 10-2-207 as they existed prior to 1993. 10-2-403. Exemption from license examination. (1) The following applicants shall be exempt from the written examination requirements set forth in section 10-2-402: (a) An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in this state or another state shall not be required to complete any prelicensing education or examination. This exemption is only available to a nonresident applicant if: (I) (A) The person is currently licensed in his or her home state for the same line or lines of authority; or (B) The application is received within twelve months after the cancellation of the applicant's previous license; and (II) (A) The prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state; or (B) The state's producer database records, maintained by the national association of insurance commissioners or its affiliates or subsidiaries, indicate that the producer is or was licensed in good standing for the line of authority requested. (b) An individual applicant for a health maintenance organization or nonprofit hospital representative producer license or a travel-ticket-selling insurance producer license to solicit, Colorado Revised Statutes 2019 Page 65 of 943 Uncertified Printout procure, and deliver accident and health or travel baggage insurance policies offered by a life, casualty, or multiple-line insurer licensed in this state; (b.5) A person licensed as an insurance producer in another state who moves to this state shall make application within ninety days after establishing legal residence to become a resident licensee pursuant to section 10-2-404. No prelicensing education or examination shall be required of that person to obtain any line of authority previously held in the prior state except where the insurance commissioner determines otherwise by regulation. (c) An individual applicant who holds the designation of chartered life underwriter ("CLU"); except that such individual is not exempt from that portion of the examination pertaining to Colorado laws and rules pertinent to life insurance and health coverage insurance; (d) An individual applicant who has attained the designation of chartered property and casualty underwriter ("CPCU"); except that such individual is not exempt from taking that portion of the examination pertaining to Colorado laws and rules pertaining to property, casualty, or health coverage; (e) A nonresident individual applicant who is in compliance with section 10-2-501 (1)(a); (f) A licensed life insurance producer applicant for a variable contracts license who is in compliance with the qualification requirement in section 10-2-407; (g) An individual applicant who holds the designation of chartered financial consultant ("ChFC"); except that such individual is not exempt from that portion of the examination pertaining to Colorado laws and rules pertinent to life insurance and health coverage insurance; (h) An individual applicant who holds the designation of registered health underwriter ("RHU"); except that such individual is not exempt from that portion of the examination pertaining to Colorado laws and rules pertinent to life insurance and health coverage insurance. Source: L. 93: Entire article R&RE, p. 1357, § 1, effective January 1, 1995. L. 95: (1)(c) amended, p. 90, § 3, effective March 30. L. 2001: (1)(a) and (1)(f) amended and (1)(b.5), (1)(g), and (1)(h) added, p. 1196, § 10, effective January 1, 2002. L. 2003: IP(1) amended, p. 1982, § 6, effective May 22. Editor's note: This section is similar to former § 10-2-211 as it existed prior to 1993. 10-2-404. Application for license. (1) An applicant for a resident insurance producer license shall make application on a form specified by the commissioner and shall declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall verify that: (a) The individual is at least eighteen years of age; (b) The individual has not committed any act which is a ground for denial, suspension, or revocation as set forth in section 10-2-801; (c) The individual is a resident of this state or is a resident of another state and meets the requirements of section 10-2-502; (d) If the individual applicant is a nonresident, such applicant has furnished the commissioner with a current certification of license status pursuant to section 10-2-502 (1)(e); Colorado Revised Statutes 2019 Page 66 of 943 Uncertified Printout (e) Unless exempt, the individual has satisfied minimum prelicensure education requirements pursuant to part 2 of this article; (f) The individual has paid the license fee prescribed by the commissioner in accordance with section 10-2-413; (g) The individual has successfully passed the examination or has satisfied examination qualification requirements for the line or lines of authority for which the individual has applied; and (h) The individual is competent, trustworthy, and of good moral character and good business reputation. (2) An insurance agency or business entity acting as an insurance producer shall obtain an insurance producer license. Application shall be made on a form specified by the commissioner. Before approving the application, the commissioner shall verify that: (a) The agency has disclosed to the insurance commissioner all officers, partners, and directors, whether or not they are licensed as insurance producers; (b) The agency's officers, directors, or partners are trustworthy, of good moral character, and of good business reputation; (c) The insurance agency or business entity has paid the fees prescribed by the commissioner in accordance with section 10-2-413; (d) The insurance agency or business entity has designated a licensed producer who is an officer, partner, or director responsible for the insurance agency's or business entity's compliance with the insurance laws and rules of this state; (e) The insurance agency or business entity has registered with the commissioner the name of each natural person who, as an officer, director, partner, owner, or member of the insurance agency or business entity, is acting as and is licensed as an insurance producer; (f) The insurance agency or business entity has registered with the commissioner at least one individual who holds a valid insurance producer license for the line or lines of authority requested in the application; (g) If the insurance agency's or business entity's filing status is nonresident, the insurance agency or business entity has complied with the qualification requirements of section 10-2-502. (3) The commissioner may require the filing of any documents reasonably necessary to verify the information contained or required in the application. (4) Each insurer that sells, solicits, or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting, or negotiating limited lines credit insurance, a program of instruction that may be approved by the insurance commissioner. Source: L. 93: Entire article R&RE, p. 1357, § 1, effective January 1, 1995. L. 2001: IP(1), (1)(c), (1)(d), (1)(g), IP(2), (2)(c), (2)(d), (2)(e), (2)(f), and (2)(g) amended and (4) added, p. 1197, § 11, effective January 1, 2002. Editor's note: This section is similar to former §§ 10-2-103 and 10-2-207 as they existed prior to 1993. Colorado Revised Statutes 2019 Page 67 of 943 Uncertified Printout 10-2-405. Residency - individuals - agencies. (1) The commissioner may qualify an applicant as a resident of this state and shall issue an insurance producer license to any qualified resident person of this state in accordance with the following: (a) An individual applicant may qualify as a resident only if he or she resides in this state. Any license issued pursuant to any application claiming residency for licensing purposes shall constitute an election of residency in this state and shall be void if the licensee, while holding a resident license in this state, also holds or makes application for a license in or thereafter claims to be a resident of any other state or jurisdiction, or if the licensee ceases to be a resident of this state. (b) An insurance agency or business entity may qualify as a resident if the agency has its principal office in this state; (c) The resident person is in compliance with the requirements of section 10-2-404. Source: L. 93: Entire article R&RE, p. 1359, § 1, effective January 1, 1995. L. 2001: (1)(b) amended, p. 1198, § 12, effective January 1, 2002. Editor's note: This section is similar to former § 10-2-207 as it existed prior to 1993. 10-2-406. Licensing of agencies. (1) For the purposes set forth in section 10-2-701, an insurance agency or business entity shall be licensed as an insurance producer. (2) (a) The insurance agency or business entity shall register the name of every natural person who, as a member, officer, director, stockholder, owner, or employee of the agency or business entity, is acting as and is licensed as an insurance producer. (b) A fee, prescribed by the commissioner in accordance with section 10-2-413, shall be paid for the registration of each insurance producer. (3) The insurance agency or business entity shall, within ten days, notify the commissioner, on a form prescribed by the commissioner, of every change relative to the licensed individual insurance producers registered and authorized to act as insurance producers for the insurance agency or business entity. (4) The insurance agency or business entity shall, within ten days, notify the commissioner, on a form prescribed by the commissioner, of any change relative to the insurance agency or business entity name, officers, directors, partners, or owners, to report a merger, or that the insurance agency or business entity has ceased doing business in this state. (5) When an insurance agency or business entity ceases to do business in this state, the insurance agency or business entity shall return the producer license to the commissioner within ten days after ceasing to do business. (6) When an insurance agency or business entity changes its principal address to another state, the insurance agency or business entity shall, within ten days, notify the commissioner and return the producer license for cancellation. Relicensing will be subject to the provisions of part 5 of this article. (7) (a) The insurance agency or business entity shall comply with section 10-2-404. (b) A nonresident insurance agency shall also comply with the qualification requirements of section 10-2-501. Colorado Revised Statutes 2019 Page 68 of 943 Uncertified Printout Source: L. 93: Entire article R&RE, p. 1359, § 1, effective January 1, 1995. L. 2001: (1), (2)(a), (3), (4), (5), (6), and (7)(a) amended, p. 1198, § 13, effective January 1, 2002. 10-2-407. License - definitions of lines of insurance - authority. (1) Unless a person is denied licensure pursuant to section 10-2-801, the division shall issue to a person who has met the requirements of sections 10-2-401 and 10-2-404 an insurance producer license. An insurance producer may receive qualification for a single license to include one or more of the following lines of authority: (a) "Life", which means insurance coverage on human lives that: (I) Shall include benefits of endowment and annuities; and (II) May include benefits for: (A) The event of death or dismemberment by accident; and (B) Disability income; (b) "Accident and health", which means insurance coverage for sickness, bodily injury, or accidental death and that may include benefits for disability income; (c) "Variable life and variable annuity products", which means insurance coverage provided under variable life insurance contracts and variable annuities; (d) "Property", which means insurance coverage for the direct or consequential loss or damage to property of every kind; (e) "Casualty", which means insurance coverage against legal liability, including that for death, injury, or disability or damage to real or personal property; (f) Repealed. (g) Limited lines credit insurance; (h) Crop hail; (i) Title; (j) Surplus lines; (k) Travel insurance, as defined in section 10-2-414.5; (l) Health maintenance organizations ("HMO"); except that no person shall be issued a new license for this individual line of authority on or after January 1, 2002, pursuant to section 10-2-402; (m) Nonprofits; except that no person shall be issued a new license for this individual line of authority on or after January 1, 2002, pursuant to section 10-2-402; (n) "Personal lines", which means property and casualty insurance sold to individuals and families for primarily noncommercial purposes; or (o) Any other line of insurance permitted under state law or regulation. (2) (Deleted by amendment, L. 2001, p. 1199, § 14, effective January 1, 2002.) (3) An insurance producer license for surplus lines may be issued to resident persons pursuant to article 5 of this title. Source: L. 93: Entire article R&RE, p. 1360, § 1, effective January 1, 1995. L. 99: (1)(f) amended, p. 988, § 6, effective January 1, 2000. L. 2001: IP(1), (1)(a), (1)(b), (1)(c), (1)(d), (1)(e), (1)(g), (1)(h), (1)(l), (1)(m), and (2) amended and (1)(n) and (1)(o) added, p. 1199, § 14, effective January 1, 2002. L. 2008: (1)(h) amended, p. 209, § 3, effective March 26. L. 2012: IP(1) amended and (1)(f) repealed, (HB 12-1266), ch. 280, p. 1494, § 9, effective July 1. L. 2014: (1)(k) amended, (HB 14-1185), ch. 202, p. 734, § 1, effective August 6. Colorado Revised Statutes 2019 Page 69 of 943 Uncertified Printout Editor's note: This section is similar to former §§ 10-2-104, 10-2-111, 10-2-204, and 102-207 as they existed prior to 1993. 10-2-408. License - contents - continuation due date. (1) The commissioner shall issue a perpetual insurance producer license to an applicant who has met the requirements of section 10-2-404. (2) The license shall state the name, address, and personal identification number of the licensee, the date of issuance, general conditions relative to expiration or cancellation, the line or lines of insurance covered by the license, and any other information the commissioner deems proper or necessary. (3) The license issued to an individual, as a sole proprietor, shall include the trade name under which the licensee acts in the solicitation or negotiation of insurance contracts. (4) Subject to continuation, each insurance producer license shall remain in effect unless revoked or suspended as long as the continuation fee as prescribed by the commissioner in accordance with section 10-2-413 is paid and education requirements are met on or before the due date. (5) The commissioner shall establish, by rule, the continuation due date and application procedures for continuation of the license and for the acceptance of a late filing fee. (6) Any person who holds either a Colorado insurance producer license, a resident surplus lines license, or the equivalent issued by another state or territory that offers Colorado surplus lines producers' nonresident licenses on a reciprocal basis and is deemed by the commissioner to be competent and trustworthy may be licensed as a surplus line producer upon the condition that the producer shall conduct business under the license in accordance with the provisions of this article and shall promptly remit the taxes provided by section 10-5-111. (7) A licensed insurance producer who fails to comply with license continuation or renewal procedures due to military service, long-term medical disability, or any other condition the commissioner deems appropriate, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with continuation or renewal procedures. Source: L. 93: Entire article R&RE, p. 1361, § 1, effective January 1, 1995. L. 95: (6) amended, p. 489, § 1, effective May 16. L. 2001: (6) amended and (7) added, p. 1200, § 15, effective January 1, 2002. Editor's note: This section is similar to former §§ 10-2-104, 10-2-111, and 10-2-207 as they existed prior to 1993. 10-2-409. License - amendment - reissuance. (1) An insurance producer licensee shall promptly notify the commissioner, on a form prescribed by the commissioner, of any change that will require amending a license to reflect that change, including without limitation a legal change of the licensee's name, a change of address, or change or removal of a trade name. The commissioner may require the licensee to furnish any documents necessary to verify any change and to properly amend the license. (2) Repealed. Colorado Revised Statutes 2019 Page 70 of 943 Uncertified Printout Source: L. 93: Entire article R&RE, p. 1362, § 1, effective January 1, 1995. L. 2001: (2) repealed, p. 1201, § 16, effective January 1, 2002. 10-2-410. Temporary licensing. (1) The commissioner may issue a temporary license to an individual to act as an insurance producer for a period not to exceed one hundred eighty days, without requiring an examination, if the commissioner deems that such temporary license authority is necessary for the servicing of an insurance business in the following cases: (a) To the surviving spouse or next of kin, or to the executor or an employee, of a licensed insurance producer who becomes deceased; (b) To the surviving spouse or next of kin, or to an employee or the legal guardian, of a licensed insurance producer who becomes disabled; (c) To a member, employee, or officer of a licensed insurance agency or business entity, licensed as an insurance producer upon the death or disability of an individual designated in or registered as to the agency or business entity license; (d) To the designee of a licensed insurance producer upon entering active service in the armed forces of the United States; (e) To any person in any other circumstance where the commissioner deems that the public interest will best be served by the issuance of such license. (2) The commissioner may, by order, limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee. The commissioner may impose other requirements designed to protect insureds and the public. The commissioner may, by order, revoke a temporary license if the interest of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business. Source: L. 93: Entire article R&RE, p. 1362, § 1, effective January 1, 1995. L. 2001: IP(1) and (1)(c) amended and (2) added, p. 1201, § 17, effective January 1, 2002. Editor's note: This section is similar to former § 10-2-219 as it existed prior to 1993. 10-2-411. Duplicate license. The commissioner may issue a duplicate license to any actively licensed insurance producer if such producer's license is lost, stolen, or destroyed upon an affidavit by the producer in a form prescribed and furnished by the commissioner concerning the facts of such loss, theft, or destruction. Source: L. 93: Entire article R&RE, p. 1362, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1202, § 18, effective January 1, 2002. 10-2-412. Change of address - notification. (1) Individual and insurance agency producer licensees shall inform the commissioner in writing, in a form prescribed by the commissioner, of any change of address within thirty days after the change. (2) Failure of any licensee to inform the commissioner of any change to the licensee's address of record or residence address shall be grounds for the assessment of a penalty. Colorado Revised Statutes 2019 Page 71 of 943 Uncertified Printout Source: L. 93: Entire article R&RE, p. 1362, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1202, § 19, effective January 1, 2002. 10-2-413. Fees. (1) The commissioner shall, by rule, set reasonable fees and penalties for the following: (a) Insurance producer license; and (b) Continuation of license. (2) All fees payable to the commissioner pursuant to this section shall be nonrefundable. Fees shall be set at the levels necessary to ensure that revenues from such fees, together with revenues from all other fees and taxes collected by the division of insurance in any fiscal year, do not exceed the division's actual direct and indirect costs of operation for that year. Source: L. 93: Entire article R&RE, p. 1363, § 1, effective January 1, 1995. L. 95: (1)(t) and (1)(u) added, p. 90, § 4, effective March 30. L. 99: (1)(o), (1)(p), and (1)(r) repealed, p. 663, § 1, effective January 1, 2000. L. 2001: (1) amended, p. 1202, § 20, effective January 1, 2002. Editor's note: This section is similar to former §§ 10-2-110 and 10-2-207 as they existed prior to 1993. 10-2-414. Additional lines of authority - application for license. An insurance producer licensee requesting licensure for any additional line or lines of authority shall comply with the requirements of section 10-2-404. Upon receipt of the application filing, any supporting documents as required by section 10-2-404, and the applicable fee, the commissioner may issue a replacement license to include the additional lines. Source: L. 93: Entire article R&RE, p. 1364, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1203, § 21, effective January 1, 2002. Editor's note: This section is similar to former § 10-2-208 as it existed prior to 1993. 10-2-414.5. Travel insurance - limited lines license - travel insurance producers definitions. (1) As used in this section: (a) "Limited lines travel insurance producer" means a licensed insurance producer, including a limited lines producer, who is designated by an insurer as the travel insurance supervising entity. (b) "Offer and disseminate" means to provide general information about travel insurance, including a description of the coverage and price, as well as processing the application, collecting premiums, and performing other nonlicensable activities permitted by the state. (c) "Travel insurance" means insurance coverage for personal risks incident to planned travel, including: Interruption or cancellation of a trip or event; loss of baggage or personal effects; damages to accommodations or rental vehicles; or sickness, accident, disability, or death occurring during travel. "Travel insurance" does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting six months or longer, including those working overseas as an expatriate or military personnel being deployed. Colorado Revised Statutes 2019 Page 72 of 943 Uncertified Printout (d) "Travel retailer" means a business entity that makes, arranges, or offers travel services and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer. For the purposes of this definition, the term "business entity" may include any individual working for or acting on behalf of the travel retailer. (2) (a) The commissioner may issue a limited lines travel insurance producer license to an individual or business entity that authorizes the limited lines travel insurance producer to sell, solicit, or negotiate travel insurance through a licensed insurer in a form and manner prescribed by the commissioner. (b) A travel retailer may offer and disseminate travel insurance as a service to its customers, on behalf of and under the direction of a business entity that holds a limited lines travel insurance producer license. In doing so, the travel retailer must provide to prospective purchasers of travel insurance: (I) A description of the material terms or the actual material terms of the insurance coverage; (II) A description of the process for filing a claim; (III) A description of the review or cancellation process for the travel insurance policy; and (IV) The identity and contact information of the insurer and limited lines producer. (c) At the time of licensure, the limited lines travel insurance producer shall establish and maintain a register of each travel retailer that offers travel insurance on the limited lines producer's behalf on a form prescribed by the commissioner. The limited lines travel insurance producer must maintain and update the register annually and include: The name, address, and contact information of each travel retailer; the name, address, and contact information of an officer or person who directs or controls the travel retailer's operations; and the travel retailer's federal tax identification number. The limited lines travel insurance producer must submit the register to the commissioner upon request. The limited lines travel insurance producer must also certify that the travel retailer registered is not in violation of 18 U.S.C. sec. 1033. (d) The limited lines travel insurance producer must designate one of its employees who is a licensed individual producer as the person responsible for the limited lines travel insurance producer's compliance with the travel insurance laws and rules of the state. (e) The limited lines travel insurance producer shall require each employee and authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, which may be subject to review by the commissioner. The training material must include, at minimum, instructions on the types of insurance offered, ethical sales practices, and required disclosures to prospective customers. (3) A limited lines travel insurance producer and those registered under its license are exempt from the prelicensure educational requirements in section 10-2-201, continuing education requirements in section 10-2-301, and examination and continuing education requirements in section 10-2-403. (4) Any travel retailer offering or disseminating travel insurance shall make brochures or other written materials available to prospective purchasers that: (a) Provide the identity and contact information of the insurer and the limited lines travel insurance producer; Colorado Revised Statutes 2019 Page 73 of 943 Uncertified Printout (b) Explain that the purchase of travel insurance is not required in order to purchase any other product or service from the travel retailer; and (c) Explain that an unlicensed travel retailer is permitted to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage. (5) A travel retailer's employee or authorized representative who is not licensed as an insurance producer may not: (a) Evaluate or interpret the technical terms, benefits, or conditions of the offered travel insurance coverage; (b) Evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or (c) Hold himself or herself out as a licensed insurer, licensed producer, or insurance expert. (6) A travel retailer whose insurance-related activities, and those of its employees and authorized representatives, are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines travel insurance producer meeting the conditions stated in this section is authorized to receive related compensation for the services upon registration by the limited lines travel insurance producer. (7) Travel insurance may be provided under an individual policy or under a group or master policy. (8) The limited lines travel insurance producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure that the travel retailer complies with this section. (9) The commissioner may take disciplinary action against a limited lines travel insurance producer pursuant to section 10-2-801. Source: L. 2014: Entire section added, (HB 14-1185), ch. 202, p. 734, § 2, effective August 6. 10-2-415. Appointment of insurance producer by insurer - continuation exceptions. (Repealed) Source: L. 93: Entire article R&RE, p. 1364, § 1, effective January 1, 1995. L. 99: Entire section repealed, p. 663, § 2, effective January 1, 2000. 10-2-415.5. Appointment of insurance producer - continuation - renewal exceptions. (1) No insurance producer shall claim to be a representative or authorized or appointed agent of, or use any other term implying a contractual relationship with, a particular bail insurance company or accept applications on behalf of the bail insurance company unless the insurance producer becomes through a written contract a producer appointee, appointed by that bail insurance company in accordance with this section, to act in the capacity of an agent of the bail insurance company. Colorado Revised Statutes 2019 Page 74 of 943 Uncertified Printout (2) (a) A bail insurance company shall notify the commissioner of each insurance producer appointment. Each bail insurance company shall file with the commissioner, monthly or at such other less frequent intervals as the commissioner may prescribe, a current list of insurance producers that it has appointed to solicit business on its behalf. The list shall contain all relevant appointment information as prescribed by the commissioner, including the effective date of appointment. (b) Subject to renewal, each insurance producer appointment shall remain in effect until: (I) The insurance producer's license is allowed to expire, discontinued, or cancelled by the insurance producer or revoked by the commissioner; or (II) Notice of termination of the appointment is filed with the commissioner by the insurer. (c) (I) A bail insurance company shall not appoint an insurance producer to act as its agent to write bail bonds unless the agent is licensed as an insurance producer authorized to write bail bonds and has completed the prelicensure education required by this paragraph (c) and submitted to the bail insurance company evidence of satisfactory completion of the education. The education must be approved by the division and consist of at least: (A) Eight clock hours regarding bail bonding, two of which concern the criminal court system, two of which concern bail bond industry ethics, and four of which concern the bail bond laws; and (B) Sixteen clock hours of training in bail recovery practices that complies with standards established by the peace officers standards and training board under section 24-31-303 (1)(h), C.R.S. (II) This paragraph (c) does not apply to a person who has successfully completed the required prelicensure training pursuant to section 12-7-102.5, C.R.S., as it existed prior to July 1, 2012. (III) A bail insurance company failing to comply with this paragraph (c) is subject to discipline under section 10-1-110 or the assessment of a penalty. (3) Each active insurance producer appointment shall be subject to renewal on October 1 of the renewal year. The division shall provide a list of active insurance producer appointees to the bail insurance company along with a renewal invoice stating the fee required for the renewal of each active insurance producer appointment. (4) Any appointment that is not renewed on or before October 1 shall be deemed to have expired or been discontinued, effective on that date; except that the commissioner may renew an insurer's appointment upon receipt of the renewal invoice together with the renewal fees due and any applicable late fee. Source: L. 2004: Entire section added, p. 1749, § 1, effective July 1. L. 2012: (1), (2)(a), IP(2)(b), (2)(b)(I), and (3) amended and (2)(c) added, (HB 12-1266), ch. 280, p. 1494, § 10, effective July 1. 10-2-415.6. Bail bond reports required - repeal. (Repealed) Source: L. 2012: Entire section added, (HB 12-1266), ch. 280, p. 1496, § 11, effective July 1. Colorado Revised Statutes 2019 Page 75 of 943 Uncertified Printout Editor's note: Subsection (4) provided for the repeal of this section, effective July 1, 2015. (See L. 2012, p. 1496.) 10-2-415.7. Termination of insurance producer bail bonding agent - notice penalty. (1) Upon the termination of the appointment of an insurance producer bail bonding agent, the insurer shall, within fifteen days, notify the commissioner and the appointee of such termination by certified mail. (2) If the termination of an agent's appointment is for any of the causes listed in section 10-1-128 or 10-2-801, the insurer shall notify the commissioner of the reason and, if the commissioner so requests, the insurer shall provide any information, records, statements, or other data pertaining to the termination that may be used by the division in any action taken under section 10-2-801. (3) Any information, documents, records, or statements provided pursuant to this section shall be privileged, and there shall be no liability on the part of, nor shall a cause of action of any nature arise against, the division, the insurance company, or any authorized representative for requesting or providing such information, documents, records, or statements; except that such information may be used by the division to pursue administrative or criminal prosecutions. (4) In addition to any other penalty or liability authorized by law, the failure or refusal of any insurer to comply with the requirements of subsection (1) or (2) of this section shall be cause for the assessment against the insurer of a civil penalty of up to one thousand dollars for each such failure or refusal if, after notice to the insurer and after a hearing in accordance with section 24-4-105, C.R.S., the commissioner finds that the insurer has violated this section. Source: L. 2004: Entire section added, p. 1749, § 1, effective July 1. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1497, § 12, effective July 1. 10-2-416. Notification to the commissioner of termination. (1) Termination for cause. An insurer or authorized representative of the insurer that terminates employment, a contract, or other insurance business relationship with a producer shall notify the commissioner within thirty days following the effective date of the termination, using a format prescribed by the commissioner, if the reason for termination is one of the reasons set forth in this article and article 3 of this title, or the insurer has knowledge the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in this article and article 3 of this title. Upon the written request of the commissioner, the insurer shall provide additional information, documents, records, or other data pertaining to the termination or activity of the producer. (2) Ongoing notification requirement. The insurer or the authorized representative of the insurer shall promptly notify the commissioner, in a format prescribed by the commissioner, if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the commissioner pursuant to subsection (1) of this section had the insurer known of its existence. (3) Copy of notification to be provided to producer. A copy of the notification pursuant to this subsection (3) shall be provided to the producer pursuant to the following requirements: Colorado Revised Statutes 2019 Page 76 of 943 Uncertified Printout (a) Within fifteen days after making the notification required by subsections (1) and (2) of this section, the insurer shall mail a copy of the notification to the producer at the producer's last-known address. If the producer is terminated for cause as listed in section 10-2-801, the insurer shall provide a copy of the notification to the producer at the producer's last-known address by certified mail, return receipt requested and postage prepaid, or by overnight delivery using a nationally recognized carrier. (b) Within thirty days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the commissioner. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the commissioner's file and accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subsection (5) of this section. (4) Immunities. (a) In the absence of wilful and wanton behavior, an insurer, the authorized representative of the insurer, a producer, the commissioner, or an organization of which the commissioner is a member and that compiles the information and makes it available to other commissioners or regulatory or law enforcement agencies shall not be subject to civil liability, and a civil cause of action of any nature shall not arise against these entities or their respective agents or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the commissioner, from an insurer or producer or a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under this paragraph (a) was reported to the commissioner, if the propriety of any termination for cause under subsection (1) of this section is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship. (b) Paragraph (a) of this subsection (4) shall not abrogate or modify any existing statutory or common law privileges or immunities. (5) Confidentiality. (a) (I) Except as provided in paragraph (e) of this subsection (5), any documents, materials, or other information in the control or possession of the division of insurance that is furnished by an insurer, producer, or employee or agent thereof acting on behalf of the insurer or producer, or obtained by the commissioner in an investigation pursuant to this section, shall not be subject to article 72 of title 24, C.R.S. (II) The commissioner is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's duties. (b) Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner shall be required to testify in any private civil action concerning any confidential documents, materials, or information subject to paragraph (a) of this subsection (5). (c) In order to assist in the performance of the commissioner's duties under this article, the commissioner, if the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information, and has the authority to do so, may: (I) Share documents, materials, or other information, including the documents, materials, or information subject to paragraph (a) of this subsection (5), with any of the following: (A) Other state, federal, and international regulatory agencies; Colorado Revised Statutes 2019 Page 77 of 943 Uncertified Printout (B) The national association of insurance commissioners or its affiliates or subsidiaries; and (C) State, federal, and international law enforcement authorities. (II) Receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the national association of insurance commissioners, its affiliates or subsidiaries, and regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (III) Enter into agreements governing sharing and use of information consistent with this subsection (5). (d) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in paragraph (c) of this subsection (5). (e) Nothing in this article shall preclude the commissioner or the commissioner's designee from releasing final disciplinary actions or closed files, including those portions of the record pertaining to for cause terminations that shall be open to public inspection pursuant to article 72 of title 24, C.R.S., and to a database or other clearinghouse service maintained by the national association of insurance commissioners or its affiliates or subsidiaries. (f) Nothing in this article shall preclude the commissioner or the commissioner's designee from disclosing any information obtained pursuant to the provisions of this article to any state, federal, or international law enforcement agency for use in any criminal or civil investigation or prosecution, nor shall any such information be considered privileged and confidential in any criminal or civil matter, investigation, or prosecution by a government agency, except as provided in part 3 of article 72 of title 24, C.R.S. (g) Nothing in this article shall preclude the commissioner or the commissioner's designee from disclosing any information obtained or developed pursuant to the provisions of this article for use in any private civil matter, nor shall any such information be considered privileged or confidential, except as provided in part 3 of article 72 of title 24, C.R.S. Any party in interest may request the commissioner or the commissioner's designee to find that disclosure of such information in any private civil matter shall cause substantial injury to the public interest. If the commissioner finds that disclosure shall cause substantial injury to the public interest, the commissioner or the commissioner's designee may apply to the district court for an order permitting restrictions on disclosure as authorized by section 24-72-204 (6), C.R.S. (6) Penalties for failing to report. An insurer, the authorized representative of the insurer, or producer that fails to report as required under the provisions of this section or that is found to have reported with actual malice by a court of competent jurisdiction, may, after notice and hearing, have the producer's license or insurer's certificate of authority suspended or revoked and may be fined in accordance with sections 10-2-804 (4) and 10-3-1108. Source: L. 93: Entire article R&RE, p. 1365, § 1, effective January 1, 1995. L. 96: (2) amended, p. 289, § 3, effective July 1. L. 99: Entire section repealed, p. 663, § 2, effective January 1, 2000. L. 2001: Entire section RC&RE, p. 1203, § 22, effective January 1, 2002. Colorado Revised Statutes 2019 Page 78 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-2-216 as it existed prior to 1993. 10-2-416.5. Required availability to commissioner of list of producer appointees for enforcement purposes. Each insurer shall maintain a current list of producers contractually authorized to accept applications on behalf of the insurer. Each insurer shall make such list available to the commissioner upon reasonable request for purposes of conducting investigations and enforcing the provisions of this title. Source: L. 99: Entire section added, p. 663, § 3, effective January 1, 2000. 10-2-417. Public insurance adjusters - license required - financial responsibility standards of conduct - rules. (1) (a) A person shall not act or hold himself or herself out as a public adjuster in this state unless the person is licensed as a public adjuster in accordance with this article. No person who, on or before January 1, 2014, holds a license as a public adjuster previously issued under the laws of this state is required to secure an additional license under this article, but is otherwise subject to this article including complying with the financial responsibility requirements of subsection (2) of this section. The previously issued license is, for all purposes, considered a license issued under this article. (b) A person licensed as a public adjuster shall not misrepresent to an insured that he or she is an adjuster representing an insurer in any capacity, including acting as an employee of the insurer or acting as an independent adjuster, unless so appointed by an insurer in writing to act on the insurer's behalf for that specific claim or purpose. A licensed public adjuster is prohibited from charging an insured a fee if the public adjuster accepts an appointment by the insurer. (c) A business entity acting as a public adjuster is required to obtain a public adjuster license. Application shall be made in the form required by the commissioner. Before approving the application, the insurance commissioner shall find that: (I) The business entity has paid the fees set by the commissioner; and (II) The business entity has designated a licensed public adjuster responsible for the business entity's compliance with the insurance laws and rules of this state. (2) (a) Before receiving a license as a public adjuster and for the duration of the license, the applicant shall secure evidence of financial responsibility in a format prescribed by the commissioner through a surety bond executed and issued by an insurer authorized to issue surety bonds in this state, which bond: (I) Must be in the minimum amount of twenty thousand dollars; (II) Must be in favor of this state and must specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of the applicant's erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices in his or her capacity as a public adjuster; and (III) Must not be terminated unless at least thirty days' prior written notice is filed with the commissioner and given to the licensee. (b) The issuer of the evidence of financial responsibility shall notify the commissioner upon termination of the bond, unless otherwise directed by the commissioner. (c) The commissioner may ask for the evidence of financial responsibility at any time the commissioner deems relevant. Colorado Revised Statutes 2019 Page 79 of 943 Uncertified Printout (d) The commissioner shall summarily suspend the authority to act as a public adjuster if the evidence of financial responsibility terminates or becomes impaired. (3) A public adjuster shall not pay a commission, service fee, or other valuable consideration to a person for investigating or settling claims in this state if that person is required to be licensed under this article and is not licensed. (4) In the event of a catastrophic disaster, no public adjuster shall charge, agree to, or accept as compensation or reimbursement any payment, commission, fee, or other thing of value in excess of ten percent of any insurance settlement or proceeds. No public adjuster shall require, demand, or accept any fee, retainer, compensation, deposit, or other thing of value prior to settlement of a claim. (5) A public adjuster who receives, accepts, or holds any funds on behalf of an insured towards the settlement of a claim for loss or damage shall deposit the funds in a noninterestbearing escrow or trust account in a financial institution that is insured by an agency of the federal government in the public adjuster's home state or where the loss occurred. (6) (a) A public adjuster is obligated, under his or her license, to serve with objectivity and loyalty the interest of his or her client alone and to render to the insured such information, counsel, and service, within the knowledge, understanding, and opinion in good faith of the licensee, as will best serve the insured's insurance claim needs and interests. (b) A public adjuster shall not solicit, or attempt to solicit, an insured during the progress of a loss-producing occurrence, as defined in the insured's insurance contract. (c) A public adjuster shall not permit an unlicensed employee or representative of the public adjuster to conduct business for which a license is required under this article. (d) A public adjuster shall not have a direct or indirect financial interest in any aspect of the claim, other than the salary, fee, commission, or other consideration established in the written contract with the insured. (e) A public adjuster shall not acquire any interest in salvage of property subject to the contract with the insured unless the public adjuster obtains written permission from the insured after settlement of the claim with the insurer. (f) A public adjuster shall not refer or direct the insured to get needed repairs or services in connection with a loss from any person: (I) With whom the public adjuster has a financial interest; or (II) From whom the public adjuster may receive direct or indirect compensation for the referral. (g) A public adjuster shall not participate directly or indirectly in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the public adjuster. (h) A public adjuster shall not engage in any other activities that may reasonably be construed as presenting a conflict of interest, including soliciting or accepting any remuneration from, or having a financial interest in, any salvage firm, repair firm, or other firm that obtains business in connection with any claim the public adjuster has a contract or agreement to adjust. (i) Public adjusters shall adhere to the following general ethical requirements: (I) A public adjuster shall not undertake the adjustment of a claim if the public adjuster is not competent and knowledgeable as to the terms and conditions of the insurance coverage or if the adjustment of the claim otherwise exceeds the public adjuster's expertise. Colorado Revised Statutes 2019 Page 80 of 943 Uncertified Printout (II) A public adjuster shall not knowingly make any oral or written material misrepresentations or statements which are false and intended to injure any person engaged in the business of insurance to any insured client or potential insured client. (III) A public adjuster, while licensed in this state, shall not represent or act as a company adjuster or independent adjuster on the same claim. (IV) (A) The insured may rescind any contract or other form of agreement for representation in a property or casualty loss or claim if the insured exercises this right of rescission in writing addressed to the insurer and the public adjuster and puts the written rescission, postage prepaid, in the United States mail within seventy-two hours after signing a settlement representation agreement. All public adjusters taking a representative agreement to resolve a property or casualty loss or claim on behalf of an insured shall give to the insured written notice of, and direction as to, the ability to exercise the insured's right of rescission. (B) A public adjuster shall not enter into a contract that prevents an insured from pursuing any civil remedy after the required rescission period under sub-subparagraph (A) of this subparagraph (IV). (V) A public adjuster shall not enter into a contract or accept a power of attorney that vests in the public adjuster the effective authority to choose the persons who perform repair work. (VI) A public adjuster shall ensure that all contracts for the public adjuster's services are in writing and set forth all terms and conditions of the engagement. (j) A public adjuster shall not agree to any loss settlement without the insured's knowledge and consent. (7) The commissioner may promulgate rules as necessary to carry out this section, including: (a) Requirements and standards for written contracts between public adjusters and insureds; and (b) The required retention of records by public adjusters. Source: L. 95: Entire section added, p. 90, § 5, effective March 30. L. 2013: Entire section amended, (HB 13-1062), ch. 61, p. 202, § 4, effective January 1, 2014. 10-2-418. Bail bonding authority. (1) The division shall advise state court administrators that a person may furnish a bail bond if the person is a licensed insurance producer with a power of attorney from an insurance company, appears on the division's website as an active insurance producer with casualty authority, and is appointed by that insurance company. (2) The division shall issue credentials to each insurance producer who is appointed by a bail insurance company that clearly identifies the person as holding authority to act as a bail bond agent. Source: L. 2012: Entire section added, (HB 12-1266), ch. 280, p. 1497, § 13, effective July 1. PART 5 Colorado Revised Statutes 2019 Page 81 of 943 Uncertified Printout NONRESIDENT LICENSES 10-2-501. Reciprocity. (1) The commissioner shall waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except those requirements imposed by section 10-2-502, if the applicant's home state awards nonresident licenses to residents of this state on the same basis. (2) A nonresident producer's satisfaction of a nonproducer's home state's continuing education requirements for licensed insurance producers shall constitute satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis. Source: L. 93: Entire article R&RE, p. 1366, § 1, effective January 1, 1995. L. 2001: Entire section R&RE, p. 1206, § 23, effective January 1, 2002. 10-2-502. Nonresident licensing - qualification. (1) The commissioner may qualify an applicant as a nonresident, unless the applicant is denied licensure pursuant to section 10-2-801, and shall issue an insurance producer license to any qualified nonresident person in accordance with the following: (a) The person maintains a license in good standing in the person's home state; (b) An insurance agency or business entity may qualify as a nonresident if the agency or business entity has its principal office located in another state; (c) The nonresident person holds a similar license that is awarded on the same basis in the nonresident's home state and for the same line or lines of authority applied for in this state; (d) The person has submitted the proper request for licensure and has paid the fees set forth by regulation; (e) The nonresident person has filed with the commissioner a current certification of license status for the purposes set forth in section 10-2-501; (f) The person has submitted or transmitted to the insurance commissioner the application for licensure that the person submitted to his or her home state, or in lieu of the application, a completed uniform application. (2) The commissioner may verify the producer's licensing status through the producer database maintained by the national association of insurance commissioners or its affiliates or subsidiaries. (3) A license issued to a nonresident person shall confer the same rights and privileges as those afforded a resident licensee. (3.5) A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within thirty days after the change of legal residence. No fee or license application is required. (4) If the insurance department of the nonresident insurance producer's resident state suspends, terminates, or revokes the producer's insurance license in that state, the nonresident insurance producer shall notify the commissioner and shall return the Colorado nonresident license pursuant to section 10-2-804. Colorado Revised Statutes 2019 Page 82 of 943 Uncertified Printout (5) Notwithstanding any other provision of this article, a person licensed as a surplus lines producer in the surplus lines producer's home state shall receive a nonresident surplus lines producer license pursuant to subsection (1) of this section; except that nothing in this section otherwise amends or supercedes any provision of this part 5. (6) Notwithstanding any other provision of this article, a person licensed as a limited lines credit insurance or other type of limited line producer in the limited line producer's home state shall receive a nonresident limited line producer license, pursuant to subsection (1) of this section, granting the same scope of authority granted under the license issued by the producer's home state. For the purposes of this subsection (6), limited lines insurance is any authority granted by the home state which restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to section 10-2-407. Source: L. 93: Entire article R&RE, p. 1366, § 1, effective January 1, 1995. L. 2001: (1), (2), and (3) amended and (3.5), (5), and (6) added, p. 1206, § 24, effective January 1, 2002. L. 2012: IP(1) amended, (HB 12-1266), ch. 280, p. 1497, § 14, effective July 1. 10-2-503. Commissioner as agent for service of process. (1) By the filing of the application and issuance of a nonresident insurance producer license, a nonresident insurance producer licensee shall be deemed to have appointed the commissioner and successors in office as said nonresident's agent upon whom all lawful process in any legal proceeding against the nonresident may be served and to have agreed that any such lawful process has the same legal force and validity as personal service of process upon such nonresident. (2) The commissioner shall, within ten working days after receiving three copies of the process served, forward a copy of such process by registered or certified mail to the person for whom the commissioner has received such process at the nonresident individual's address of record, or, if the nonresident is an insurance agency, at the agency's principal place of business. The commissioner shall keep a record of all process so served. (3) Service of process upon any such licensee in any action or proceeding instituted by the commissioner under this section shall be made by the commissioner by mailing such process by registered mail to an individual licensee at the licensee's last known address of record or to an insurance agency licensee at its principal place of business. Source: L. 93: Entire article R&RE, p. 1367, § 1, effective January 1, 1995. L. 98: (2) amended, p. 1325, § 25, effective June 1. L. 2001: (2) amended, p. 1208, § 25, effective January 1, 2002. PART 6 BANKS AND BANK HOLDING COMPANIES 10-2-601. Financial institutions may sell insurance - where - regulation. (1) For the purposes of this part 6: (a) and (b) (Deleted by amendment, L. 97, p. 426, § 1, effective April 24, 1997.) (c) "Credit insurance" has the same meaning as set forth in section 10-10-103 (2). Colorado Revised Statutes 2019 Page 83 of 943 Uncertified Printout (d) "Credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction. (e) "Financial institution" means a state bank, including a bank and trust company chartered by a state, a trust company, a savings and loan association, a credit union, or a national bank and the financial institution is located in this state. "Financial institution" includes federally chartered savings and loan associations and credit unions located in this state. (2) No financial institution or employee thereof shall be licensed or admitted, directly or indirectly, to sell insurance in this state; except that: (a) A financial institution or employee thereof may engage in the activities of an insurance producer, an insurance agency, or a business entity in this state and shall be licensed pursuant to this article. Such producers, agencies, and business entities shall be subject to the provisions of this title and rules promulgated pursuant thereto. (b) Unlicensed employees of financial institutions shall not sell insurance or annuities. Such employees may direct customers to licensed persons. (c) A financial institution, or any subsidiary, affiliate, or employee thereof, may be licensed to sell insurance, credit insurance, and fixed and variable annuity contracts in accordance with regulations promulgated by the commissioner. (d) Any financial institution, or any subsidiary, affiliate, or employee thereof, may be permitted to own an insurance company authorized to sell, and that insurance company's employees may be licensed to sell, insurance to guarantee the payment of any amounts due in connection with any securities or obligations described in section 11-57-101, C.R.S.; except that no financial institution, or any subsidiary or affiliate subject to the supervision of the banking board created in section 11-102-103, C.R.S., shall own such an insurance company without the consent of the banking board, and no financial institution subject to the supervision of the financial services board created in section 11-44-101.6, C.R.S., shall own such an insurance company without the consent of the financial services board, and no financial institution shall invest more than ten percent of its capital and surplus in such an insurance company. (e) Any financial institution, or any subsidiary or affiliate thereof, may own, directly or indirectly, a captive insurance company operating under article 6 of this title. (f) Any trade association organized primarily to promote the common interests of financial institutions, or an affiliate or subsidiary of such association, may hold stock or other interests in an insurance company, or an affiliate or subsidiary thereof. (3) and (4) (Deleted by amendment, L. 97, p. 426, § 1, effective April 24, 1997.) (5) The commissioner shall promulgate such rules as are necessary to implement this part 6. Source: L. 93: Entire article R&RE, p. 1367, § 1, effective January 1, 1995. L. 94: (2)(a) amended, p. 1353, § 4, effective January 1, 1995. L. 97: IP(1), (1)(a), (1)(b), and (2) to (5) amended and (1)(e) added, p. 426, § 1, effective April 24. L. 99: (1)(e) amended, p. 585, § 1, effective May 17. L. 2001: (2)(a) amended, p. 1208, § 26, effective January 1, 2002. L. 2003: (2)(d) amended, p. 1206, § 4, effective July 1. L. 2013: (1)(e) amended, (SB 13-154), ch. 282, p. 1470, § 27, effective July 1. Editor's note: This section is similar to former § 10-2-221 as it existed prior to 1993. Colorado Revised Statutes 2019 Page 84 of 943 Uncertified Printout 10-2-602. Sale of annuities and insurance by financial institutions - certain tying arrangements prohibited. (1) In addition to the requirements of section 10-3-1105, no financial institution, or subsidiary or employee of a financial institution, shall extend credit, lease or sell property of any kind, furnish any service, or fix or vary the consideration for any such extension of credit, lease, sale, or service on the condition or requirement that the customer shall obtain an insurance contract or an annuity from such financial institution or any subsidiary or employee. (2) No financial institution may offer a financial product or service, or fix or vary the conditions of such product or service, conditioned on a requirement that the customer obtain insurance from such financial institution or any specific person. (3) No person shall require or imply that the purchase of an insurance product, or of an annuity from a financial institution, is a condition of the lending of money or extension of credit, maintenance of a trust account, establishment or maintenance of a checking, savings, deposit, or share account, or the provision of products or services related to such activities. Source: L. 94: Entire section added, p. 1353, § 3, effective January 1, 1995. L. 97: Entire section amended, p. 429, § 2, effective April 24. 10-2-603. Bank sale of annuities - disclosure requirements. (1) Any financial institution, or any subsidiary or employee thereof, which sells a fixed or variable annuity contract shall receive written acknowledgment from the purchaser that the annuity which is being purchased may involve investment risk and is not insured by the federal deposit insurance corporation or the national credit union share insurance fund. Such written notice shall be clear and conspicuous and shall be given before or contemporaneously with the purchase of the annuity. This subsection (1) shall apply to an affiliate or subsidiary of a financial institution if such an affiliate or subsidiary sells insurance on the premises of a financial institution. (2) A clear and conspicuous notice substantially in the following form complies with this section: Acknowledgment ___________________________________ (Complete name of investment) I understand that the investment product I am purchasing is not a bank deposit and is not an obligation of, nor is it guaranteed by, any bank. This product is not insured or guaranteed by the federal deposit insurance corporation. In addition, I understand that the investment product purchased may be subject to investment risk, including possible loss of principal, and that any investment product's past performance should not be considered an indication of future results. __________________________________________________ (Date) (Signed) Colorado Revised Statutes 2019 Page 85 of 943 Uncertified Printout Source: L. 94: Entire section added, p. 1354, § 7, effective July 1, 1995. L. 97: (1) amended, p. 429, § 3, effective April 24. 10-2-604. Disclosures. (1) A financial institution, and any person selling insurance with a cash value or a cash accumulation component on behalf of a financial institution, shall disclose to the financial institution's customers or members, and on any advertisements or promotional material, that insurance offered, recommended, sponsored, or sold by the financial institution, or on the premises of the financial institution: (a) Is not a deposit; (b) Is not insured by the federal deposit insurance corporation, the national credit union share insurance fund, or any agency of the state of Colorado or the federal government; (c) Is not guaranteed by the financial institution or any affiliated insured depository institution; (d) May involve investment risk, including loss of principal; and (e) May be purchased from a producer of the customer's choice and that the customer's choice of another insurance provider will not affect the customer's relationship with the financial institution. Source: L. 97: Entire section added, p. 429, § 4, effective April 24. L. 2001: (1)(e) amended, p. 1208, § 27, effective January 1, 2002. 10-2-605. Misleading advertising. (1) No financial institution, or any subsidiary, affiliate, or employee of a financial institution, may issue advertising that would lead a reasonable person to believe that the state of Colorado or the federal government: (a) Is responsible for insurance sales activities of the financial institution or any subsidiary, affiliate, or employee thereof; (b) Guarantees any return on insurance products or is a source of payment of any insurance obligations sold by the financial institution or any subsidiary, affiliate, or employee thereof. Source: L. 97: Entire section added, p. 430, § 4, effective April 24. 10-2-606. Discrimination against affiliated agents. (1) No financial institution shall: (a) Require, as a condition of providing or renewing a contract for providing a product or service to any customer, that the customer purchase, finance, or negotiate any policy or contract of insurance through any particular person; (b) In connection with a loan or extension of credit that requires a borrower to obtain insurance, reject an insurance policy solely because such policy has been issued or underwritten by any person who is not associated with such institution; (c) Impose any requirement on any insurance producer who is not associated with the financial institution that is not imposed on any insurance producer who is associated with such institution; or (d) Unless otherwise authorized by applicable federal or state law, require any debtor, insurer, or producer to pay a separate charge in connection with the handling of insurance that is required under a contract. Colorado Revised Statutes 2019 Page 86 of 943 Uncertified Printout Source: L. 97: Entire section added, p. 430, § 4, effective April 24. L. 2001: (1)(c) and (1)(d) amended, p. 1209, § 28, effective January 1, 2002. 10-2-607. Location of sales. To the extent practicable, a financial institution's sale of insurance shall be in a location distinct from a teller window or common teller area. Unlicensed employees of financial institutions shall not sell insurance or annuities. Such employees may direct customers to licensed persons. Source: L. 97: Entire section added, p. 431, § 4, effective April 24. PART 7 BUSINESS CONDUCT OF LICENSEES 10-2-701. Assumed names - registration - rules. Any insurance producer using an assumed name, including without limitation a trade or fictitious name, under which the insurance producer conducts business shall register the name with the insurance commissioner prior to using the assumed name. The commissioner shall not accept registration of any name that would tend to be misleading to the public or that is identical or similar to the name of any producer whose license has been revoked or suspended. Every insurance producer licensee shall promptly file with the commissioner a written notice of any change in or discontinuation of the use of any name. The commissioner may promulgate all rules necessary and proper to implement the provisions of this section. Source: L. 93: Entire article R&RE, p. 1370, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1209, § 29, effective January 1, 2002. L. 2008: Entire section amended, p. 210, § 4, effective March 26. 10-2-702. Commissions. (1) No insurer or insurance producer shall pay, directly or indirectly, any commission, service fee, brokerage, or other valuable consideration to any person selling, soliciting, or negotiating insurance within this state unless, at the time such services were performed, such person was a duly licensed insurance producer under this article for the performance of such services. In addition, no person, other than a person appropriately licensed by this state as an insurance producer at the time such services were performed, shall accept any such consideration; except that any person duly licensed under this article may pay or assign such person's commissions to, or direct that such person's commissions be paid to, a partnership of which the person is a member, employee, or agent or to a corporation of which the person is an officer, employee, or agent. This section shall not prevent payment or receipt of renewal or other deferred commissions to or by any person entitled thereto under this section. (2) An insurer or insurance producer may pay or assign commissions, service fees, brokerages, or other valuable consideration to an insurance agency, business entity, or persons who do not sell, solicit, or negotiate insurance in this state, unless the payment would violate section 10-3-1104 (1)(g). Colorado Revised Statutes 2019 Page 87 of 943 Uncertified Printout Source: L. 93: Entire article R&RE, p. 1370, § 1, effective January 1, 1995. L. 95: Entire section amended, p. 89, § 2, effective March 30. L. 2001: Entire section amended, p. 1209, § 30, effective January 1, 2002. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1497, § 15, effective July 1. 10-2-703. Countersignature not required. (Repealed) Source: L. 93: Entire article R&RE, p. 1370, § 1, effective January 1, 1995. L. 2001: Entire section repealed, p. 1210, § 31, effective January 1, 2002. 10-2-704. Fiduciary responsibilities. (1) (a) All premiums belonging to insurers and all unearned premiums belonging to insureds received by an insurance producer licensee under this article shall be treated by such insurance producer in a fiduciary capacity. The commissioner may promulgate such rules as are necessary and proper relating to the treatment of such premiums. (b) All premiums received, less commissions if authorized, shall be remitted to the insurer or its agent entitled thereto on or before the contractual due date or, if there is no contractual due date, within forty-five days after receipt. (c) All returned premiums received from insurers or credited by insurers to the account of the licensee shall be remitted to or credited to the account of the person entitled thereto within thirty days after such receipt or credit. (d) If any insurance producer has failed to account for any collected premium to the insurer to whom it is owing or to its agent entitled thereto for more than forty-five days after the contractual due date or, if there is no contractual due date, more than ninety days after receipt, the insurer or its agent shall promptly report such failure to the commissioner in writing. (2) Every insurer shall remit unearned premiums to the insured or the proper agent, or shall otherwise credit the account of the proper licensee, as soon as is practicable after entitlement thereto has been established, but in no event more than forty-five days after the effective date of any cancellation or termination effected by the insurer or after the date of entitlement thereto as established by notification of cancellation or of termination or as otherwise established. It shall be the responsibility of any insurance producer having knowledge of a failure on the part of any insurer to comply with this subsection (2) to promptly report such failure to the commissioner in writing. (3) No insurance producer under this article shall commingle premiums belonging to insurers and returned premiums belonging to insureds with the producer's personal funds or with any other funds except those directly connected with the producer's insurance business. (4) Any insurer that delivers, in this state, a policy of insurance to an insurance producer representing the interest of the insured upon the application or request of such producer shall be deemed to have authorized such producer to receive on the insurer's behalf any premium due upon issuance or delivery of the policy; and the insurer shall be deemed to have so authorized the producer. Source: L. 93: Entire article R&RE, p. 1370, § 1, effective January 1, 1995. L. 2001: (4) amended, p. 1210, § 32, effective January 1, 2002. Colorado Revised Statutes 2019 Page 88 of 943 Uncertified Printout 10-2-705. Bail bond documents - requirements - rules. (1) The insurance producer who posts a bail bond with the court on behalf of a defendant shall ensure that the following documents comply with the following provisions: (a) An indemnity agreement must: (I) Be in writing; (II) Be signed by the producer; (III) Be signed by the defendant or indemnitor; (IV) Set forth the amount of bail set in the case, the name of the defendant released on the bail bond, the court case number if available, the court where the bond is executed, the premium charged, the amount and type of collateral held by the insurance producer, and the conditions under which the collateral is returned; (V) Contain documentation that the indemnitor has received copies of signed and dated disclosure forms; and (VI) If the defendant or indemnitor is illiterate or does not read English, contain a note on the indemnity agreement that the producer or a third party has read or translated the agreement to the defendant or indemnitor and be affixed with an affidavit to the indemnity agreement attesting that the document was translated; (b) A promissory note must be: (I) In writing; (II) Signed by the producer; and (III) Signed by the defendant or indemnitor; (c) A collateral receipt must: (I) Be dated; (II) Be in writing; (III) Be signed by the producer; (IV) Be signed by the defendant or indemnitor; (V) Be prenumbered; (VI) Contain a full description of the collateral, including the condition of the collateral at the time it is taken into custody; and (VII) Set forth the amount of bail set in the case, the name of the defendant released on the bail bond, the court case number, the court where the bond is executed, the premium charged, the amount and type of collateral held by the insurance producer, and the conditions under which the collateral is returned; (d) A bail bond revocation request must be: (I) Dated; (II) In writing; (III) Signed by the producer; and (IV) Signed by the defendant or indemnitor. (2) (a) Before accepting consideration, the insurance producer who writes bail bonds shall commit to writing, sign, date, and obtain the defendant's or indemnitor's signature on an arrangement for the payment of all or part of the premium, commission, or fee, including the payment schedule. The signature of the insurance producer who writes bail bonds is not an obligation to pay any debt owed to a lender. To be enforceable, interest and financial charges on any unpaid premium must comply with the "Uniform Consumer Credit Code", articles 1 to 9 of title 5, C.R.S. Colorado Revised Statutes 2019 Page 89 of 943 Uncertified Printout (b) Before accepting consideration or taking collateral, the insurance producer who writes bail bonds shall provide, in a form prescribed by the commissioner, a disclosure statement to each defendant and indemnitor detailing the terms of the bail bond. (3) (a) An insurance producer who posts a bail bond with the court and who accepts consideration for a bail bond or undertaking shall, for each payment received, provide to the person tendering payment a prenumbered, signed receipt containing the following: (I) The date; (II) The defendant's name; (III) A description of the consideration and amount of money received; (IV) The purpose for which it was received; (V) The number of any power-of-attorney form attached to the bail bond; (VI) The penal sum of the bail bond; (VII) The name of the person tendering payment; and (VIII) The terms under which the money or other consideration is released. (b) The insurance producer who posts a bail bond with the court shall provide the person tendering payment a signed and dated receipt for each premium payment listing the amount paid. (3.5) (a) If the bond is to be secured by real estate, the bail bonding agent shall provide the property owner with a written disclosure statement in the following form at the time an initial application is filed: Disclosure of lien against real property Do not sign this document until you read and understand it! This bail bond will be secured by real property you own or in which you have an interest. Failure to pay the bail bond premiums when due or the defendant's failure to comply with the conditions of bail could result in the loss of your property! (b) The disclosure required in paragraph (a) of this subsection (3.5) shall be printed in fourteen-point, bold-faced type either: (I) On a separate and specific document attached to or accompanying the application; or (II) In a clear and conspicuous statement on the face of the application. (c) Before a property owner executes any instrument creating a lien against real property, the bail bonding agent shall provide the property owner with a completed copy of the instrument creating the lien against real property and the disclosure statement described in paragraph (a) of this subsection (3.5). If a bail bonding agent fails to comply fully with the requirements of paragraphs (a) and (b) of this subsection (3.5) and this paragraph (c), any instrument creating a lien against real property shall be voidable. (d) The bonding agent shall deliver to the property owner a fully executed and notarized reconveyance of title, a certificate of discharge, or a full release of any lien against real property that secures performance of the conditions of a bail bond within thirty-five days after receiving notice that the time for appealing an order that exonerated the bail bond has expired. The bonding agent shall also deliver to the property owner the original cancelled note as evidence that the indebtedness secured by any lien instrument has been paid or that the purposes of said instrument have been fully satisfied and the original deed of trust, security agreement, or other instrument that secured the bail bond obligation. If a timely notice of appeal is filed, the thirtyfive-day period shall begin on the day the appellate court's affirmation of the order becomes Colorado Revised Statutes 2019 Page 90 of 943 Uncertified Printout final. If the bonding agent fails to comply with the requirements of this paragraph (d), the property owner may petition the district court to issue an order directing the clerk of such court to execute a full reconveyance of title, a certificate of discharge, or a full release of any lien against real property created to secure performance of the conditions of the bail bond. The petition shall be verified and shall allege facts showing that the bonding agent has failed to comply with the provisions of this paragraph (d). (e) Any bail bonding agent who violates this subsection (3.5) is liable to the property owner for all damages that may be sustained by reason of the violation, plus statutory damages in the sum of three hundred dollars. The property owner shall be entitled to recover court costs and reasonable attorney fees, as determined by the court, upon prevailing in any action brought to enforce the provisions of this subsection (3.5). (4) The insurance producer shall prepare or execute separate agreements and documents for each time the producer posts a bail bond with the court. The producer shall give the indemnitor a copy of each document executed in the course of the bail bond transaction. (5) For three years after the date of discharge of a bail bond and return of any collateral or proof of notice to the defendant or indemnitor that any promissory note has been satisfied, the insurance producer who posts the bail bond with the court shall keep at the producer's business copies of each receipt, indemnity agreement, bond, disclosure statement, payment plan, bond revocation request, or other document or information related to the bond transaction the commissioner reasonably requires by rule and shall make these documents available for inspection by the commissioner or the commissioner's authorized representative during normal business hours. (6) The indemnitor may be the defendant. (7) The commissioner may examine the business practices, books, and records of any insurance producer as often as the commissioner deems appropriate. Source: L. 2012: Entire section added, (HB 12-1266), ch. 280, p. 1498, § 16, effective July 1. L. 2013: (3.5) added, (HB 13-1236), ch. 202, p. 840, § 6, effective May 11. 10-2-706. Insurance producer designee - responsibility. An insurance producer may use another properly licensed and appointed insurance producer as an agent to comply with the requirements of section 10-2-705, but the insurance producer who posts the bail bond with the court is responsible for compliance with section 10-2-705 and is subject to discipline for noncompliance with any provision of section 10-2-705. Source: L. 2012: Entire section added, (HB 12-1266), ch. 280, p. 1500, § 16, effective July 1. L. 2013: Entire section amended, (HB 13-1300), ch. 316, p. 1664, § 12, effective August 7. 10-2-707. Business practices - price limits - collateral. (1) An insurance producer who writes bail bonds shall not charge a premium or commission of more than the greater of fifty dollars or fifteen percent of the amount of bail furnished. An insurance producer who writes bail bonds shall not assess fees for any bail bond posted by the producer with the court unless the fee is for payment of a bail bond filing charged by a court or law enforcement agency, the fee is for Colorado Revised Statutes 2019 Page 91 of 943 Uncertified Printout the actual cost of storing collateral in a secure, self-service public storage facility, or the fee is for premium financing. (2) If an insurance producer who posts the bail bond with the court has issued a disclosure statement in accordance with section 10-2-705 (2)(b), the producer may use collateral received from the defendant or indemnitor to secure the following obligations: (a) Compliance with the bond issued on behalf of the principal; (b) Any balance due on the premium, commission, or fee for the bail bond; and (c) Any actual costs incurred by the insurance producer as a result of issuing the bail bond. (3) Subject to section 16-4-110 (1)(c) and (2), a bail premium is earned in its entirety by a compensated surety upon the defendant's release from custody. Source: L. 2012: Entire section added, (HB 12-1266), ch. 280, p. 1500, § 16, effective July 1. L. 2017: (3) added, (HB 17-1231), ch. 284, p. 1575, § 11, effective January 1, 2018. PART 8 DISCIPLINARY ACTIONS 10-2-801. Licenses - denial, suspension, revocation, termination - reporting of actions - definitions. (1) The commissioner may place an insurance producer on probation; suspend, revoke, or refuse to issue, continue, or renew an insurance producer license; order restitution to be paid from an insurance producer; or assess a civil penalty pursuant to section 102-804 or 10-3-1108, if, after notice to the insurance producer licensee and after a hearing held in accordance with sections 24-4-104 and 24-4-105, C.R.S., the commissioner finds that as to the licensee or applicant any one or more of the following conditions exist: (a) Any incorrect, misleading, incomplete, or materially untrue information in the license application; (b) Any cause for which issuance of the license could have been refused had it then existed and been known to the commissioner at the time of issuance; (c) Violation of, or noncompliance with, section 18-13-130, C.R.S., or any insurance law, or violation of any lawful rule, order, or subpoena of the commissioner or of the insurance department of another state; (d) Obtaining or attempting to obtain any such license through misrepresentation or fraud; (e) Improperly withholding, misappropriating, or converting to the licensee's or applicant's own use any moneys or property belonging to policyholders, insurers, beneficiaries, or others received in the course of the business of insurance; (f) Misrepresentation of the terms of any actual or proposed insurance contract or application for insurance; (g) (I) Conviction of a felony or misdemeanor involving moral turpitude. (II) For the purposes of this paragraph (g), "moral turpitude" shall include any sexual offense against a child as defined in section 18-3-411, C.R.S. (h) Commission of any unfair trade practice or fraud; Colorado Revised Statutes 2019 Page 92 of 943 Uncertified Printout (i) The use of fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in this state or elsewhere; (j) Suspension, revocation, or denial of an insurance license in any other state, province, district, or territory; (k) Forgery of another's name to an application for insurance or to any document related to an insurance transaction; (l) Cheating on an examination, including, but not limited to, improperly using notes or any other reference material to complete an examination for an insurance license; (m) Failure to fully meet the licensing requirements; (n) Knowingly accepting insurance business from a person who is not licensed; (o) Failing to comply with an administrative or court order imposing a child support obligation; (p) Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; or (q) Profiting either directly or indirectly from the business of a cash-bonding agent or professional cash-bail agent unless the person profiting is registered as a cash-bonding agent or professional cash-bail agent and the profit is derived from their own business. (1.5) The commissioner shall revoke the license of an insurance producer licensee if, after notice to the insurance producer licensee and after a hearing held in accordance with sections 24-4-104 and 24-4-105, C.R.S., the commissioner finds that the licensee was convicted under section 18-5-211, C.R.S. (2) In the event that the action by the commissioner is to not renew or continue or to deny an application for a license, the commissioner shall notify the applicant or licensee of the reasons for such action and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. (3) (a) A producer or business entity shall report to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within thirty days after the final disposition of the matter. This report shall include a copy of the order, consent to order, or other relevant legal document. (b) A producer shall report within thirty days after the conviction to the commissioner if he or she is convicted under section 18-5-211, C.R.S. (4) Within thirty days after the initial pretrial hearing date, a producer or business entity shall report to the commissioner any criminal prosecution of the producer in any jurisdiction. The report shall include a copy of the initial complaint, the order resulting from the hearing, and any other relevant legal documents. (5) If the commissioner revokes the license of an insurance producer pursuant to this section, or if an insurance producer surrenders its license to avoid discipline by the commissioner, the insurance producer shall not be eligible to apply for a new insurance producer license for two years after the date the license is revoked or surrendered and returned to the commissioner pursuant to section 10-2-802 (1). (6) For the purposes of this section, "restitution" means benefits or moneys owed due to the regulated entity's violation of this title. Source: L. 93: Entire article R&RE, p. 1371, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1210, § 33, effective January 1, 2002. L. 2008: (5) added, p. 210, § 5, Colorado Revised Statutes 2019 Page 93 of 943 Uncertified Printout effective March 26; IP(1) amended and (6) added, p. 585, § 1, effective August 5. L. 2012: (1)(c) amended and (1)(q) added, (HB 12-1266), ch. 280, p. 1501, § 17, effective July 1. L. 2014: (1.5) added and (3) amended, (SB 14-092), ch. 190, p. 710, § 2, effective July 1. Editor's note: This section is similar to former §§ 10-2-115, 10-2-116, 10-2-117, and 10-2-212 as they existed prior to 1993. 10-2-802. Surrender of license. (1) An insurance producer license issued under this article, although issued and delivered to the licensee, shall at all times be the property of the state of Colorado and shall be surrendered or returned promptly to the commissioner by personal delivery or by certified or registered mail within fifteen days under any of the following conditions: (a) Suspension, revocation, or termination of the license; (b) Discontinuation or nonrenewal of the license by the licensee; (c) Cessation of residency in this state or, in the case of a nonresident licensee, cessation of residency in the licensee's resident state; or (d) Suspension, termination, or revocation of a nonresident licensee's license in the state of residence. (2) The commissioner may require surrender of an insurance producer license for any proper reason in addition to the grounds stated in subsection (1) of this section. (3) As to any insurance producer license issued pursuant to this article which is lost, stolen, or destroyed while in the possession of the licensee, the commissioner may accept, in lieu of return of the license, the affidavit of the individual licensee or, in the case of an insurance agency or business entity, the person given responsibility for custody of the license, as to the facts concerning such loss, theft, or destruction. Source: L. 93: Entire article R&RE, p. 1372, § 1, effective January 1, 1995. L. 2001: (3) amended, p. 1212, § 34, effective January 1, 2002. Editor's note: This section is similar to former §§ 10-2-115, 10-2-116, 10-2-117, 10-2207, and 10-2-215 as they existed prior to 1993. 10-2-803. Notice of penalty, suspension, termination, revocation, or denial. (1) The commissioner shall promptly notify any insurance producer licensee regarding any penalty assessed, suspension, revocation, termination, or denial of the licensee's license by the commissioner. (2) Upon assessment of a penalty, suspension, revocation, or termination of the license of a resident licensee, the commissioner shall notify the central office of the national association of insurance commissioners or its affiliate or subsidiary. Source: L. 93: Entire article R&RE, p. 1373, § 1, effective January 1, 1995. L. 2001: Entire section amended, p. 1212, § 35, effective January 1, 2002. 10-2-804. Investigation by commissioner. (1) The commissioner may examine and investigate the business affairs and conduct of every person applying for or holding an insurance Colorado Revised Statutes 2019 Page 94 of 943 Uncertified Printout producer license under this article to determine whether such person has been or is engaged in any violation of the insurance laws or rules of this state or has engaged in unfair or deceptive acts or practices in any state. (2) On receipt of any information regarding the possible violation of the insurance laws or rules of this or any other state, or the possible use of unfair or deceptive practices by a person applying for or holding an insurance producer license under this article, the commissioner may require such person to appear and show cause why the commissioner should not discontinue, revoke, suspend, or refuse to issue or renew the person's license and may, upon the failure of such person to show cause, revoke, suspend, or refuse to issue or renew the license. (3) The license of an insurance agency or business entity may be suspended or revoked or the renewal or continuation refused if the commissioner finds, after hearing, that an individual licensee's violation was known or should have been known to one or more of the partners, officers, or managers acting on behalf of the insurance agency or business entity, including any foreign or domestic entity as defined in section 7-90-102, C.R.S., and that such violation was not reported to the division of insurance nor corrective action taken in relation thereto. (4) In addition to or in lieu of any applicable denial, suspension, or revocation of an insurance producer license, any person who violates any provision of this article may, after hearing, be subject to any remedy or civil penalty of not more than three thousand dollars for each such violation. (5) The commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this article against any person who is under investigation for or charged with a violation of this article even if the person's license has been surrendered or has lapsed by operation of law. Source: L. 93: Entire article R&RE, p. 1373, § 1, effective January 1, 1995. L. 2001: (2), (3), and (4) amended and (5) added, p. 1212, § 36, effective January 1, 2002. L. 2008: (4) amended, p. 2171, § 2, effective August 5. Editor's note: This section is similar to former § 10-2-214 as it existed prior to 1993. PART 9 REINSURANCE INTERMEDIARY MODEL ACT 10-2-901. Short title. This part 9 shall be known and may be cited as the "Reinsurance Intermediary Act". Source: L. 93: Entire article R&RE, p. 1374, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-301 as it existed prior to 1993. 10-2-902. Definitions. As used in this part 9, unless the context otherwise requires: (1) "Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed, the management, control, or activities of the reinsurance intermediary. Colorado Revised Statutes 2019 Page 95 of 943 Uncertified Printout (2) "Insurer" means any person, firm, association, or corporation duly licensed in this state pursuant to applicable provisions of the insurance laws as an insurer. (3) "Licensed producer" means an insurance producer or reinsurance intermediary licensed in this state pursuant to applicable provisions of the insurance laws. (4) "Reinsurance intermediary" means a reinsurance intermediary-producer as defined in subsection (6) of this section or a reinsurance intermediary-manager as defined in subsection (5) of this section. (5) "Reinsurance intermediary-manager", referred to in this part 9 as "RM", means any person, firm, association, or corporation that has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department, or underwriting office) and acts as an agent for such reinsurer whether known as an RM, manager, or other similar term. Notwithstanding the provisions of this subsection (5), the following persons shall not be considered an RM, with respect to such reinsurer, for the purposes of this part 9: (a) An employee of the reinsurer; (b) A United States manager of the United States branch of an alien reinsurer; (c) An underwriting manager who, pursuant to contract, manages all the reinsurance operations of the reinsurer and who is under common control with the reinsurer subject to the provisions of part 8 of article 3 of this title and whose compensation is not based on the volume of premiums written; (d) The manager of a group, association, pool, or organization of insurers which engage in joint underwriting or joint reinsurance and are subject to examination by the commissioner or the equivalent insurance regulatory authority of the state in which the manager's principal business office is located. (6) "Reinsurance intermediary-producer", referred to in this part 9 as "RP", means any person, other than an officer or employee of the ceding insurer, firm, association, or corporation, that solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer. (7) "Reinsurer" means any person, firm, association, or corporation duly licensed in this state pursuant to the applicable provisions of the insurance laws as an insurer with the authority to assume reinsurance. (8) "To be in violation" means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of this part 9. Source: L. 93: Entire article R&RE, p. 1374, § 1, effective January 1, 1995. L. 2009: (4) to (6) amended, (SB 09-292), ch. 369, p. 1941, § 11, effective August 5. Editor's note: This section is similar to former § 10-2-302 as it existed prior to 1993. 10-2-903. Licensure. (1) No person, firm, association, or corporation shall act as an RP in this state if the RP maintains an office either directly or as a member or employee of a firm or association, or an officer, director, or employee of a corporation: (a) In this state, unless such RP is a licensed producer in this state; or Colorado Revised Statutes 2019 Page 96 of 943 Uncertified Printout (b) In another state, unless such RP is a licensed producer in this state or another state having a law substantially similar to this part 9, or such RP is licensed in this state as a nonresident reinsurance intermediary. (2) No person, firm, association, or corporation shall act as an RM: (a) For a reinsurer domiciled in this state, unless such RM is a licensed producer in this state; (b) In this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director, or employee of a corporation in this state, unless such RM is a licensed producer in this state; (c) In another state for a nondomestic insurer, unless such RM is a licensed producer in this state or another state having a law substantially similar to this part 9 or such person is licensed in this state as a nonresident reinsurance intermediary. (3) The commissioner may require an RM subject to subsection (2) of this section to: (a) File a bond in an amount from an insurer acceptable to the commissioner for the protection of the reinsurer; and (b) Maintain an errors and omissions policy in an amount acceptable to the commissioner. (4) (a) The commissioner may issue a reinsurance intermediary license to any person, firm, association, or corporation that has complied with the requirements of this part 9. Any such license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto. (b) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving or holding a license, shall designate the commissioner as agent for service of process in the manner, and with the same legal effect, provided for by this part 9 for designation of service of process upon unauthorized insurers; and also shall furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and such change shall not become effective until acknowledged by the commissioner. (5) The commissioner may refuse to issue a reinsurance intermediary license if, in the commissioner's judgment, the applicant, any one named on the application, or any member, principal, officer, or director of the applicant, is not trustworthy, or that any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary, or that any individual specified in this subsection (5) has given cause for revocation or suspension of such license, or has failed to comply with any prerequisite for the issuance of such license. Upon written request therefor, the commissioner shall furnish a summary of the basis for refusal to issue a license, which document shall be privileged and not subject to the provisions of part 2 of article 72 of title 24, C.R.S. (6) Licensed attorneys at law of this state when acting in their professional capacity as such shall be exempt from this section. Colorado Revised Statutes 2019 Page 97 of 943 Uncertified Printout Source: L. 93: Entire article R&RE, p. 1375, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-303 as it existed prior to 1993. 10-2-904. Required contract provisions - reinsurance intermediary-producers. (1) Transactions between an RP and the insurer such RP represents shall only be entered into pursuant to a written authorization specifying the responsibilities of each party. The authorization shall, at a minimum, contain provisions that: (a) The insurer may terminate the RP's authority at any time; (b) The RP shall render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the RP, and remit all funds due to the insurer within thirty days of receipt; (c) All funds collected for the insurer's account shall be held by the RP in a fiduciary capacity in a bank which is a qualified United States financial institution; (d) The RP shall comply with section 10-2-905; (e) The RP shall comply with the written standards established by the insurer for the cession or retrocession of all risks; (f) The RP shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded. Source: L. 93: Entire article R&RE, p. 1377, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-304 as it existed prior to 1993. 10-2-905. Books and records - reinsurance intermediary-producers. (1) For at least ten years after expiration of each contract of reinsurance transacted by the RP, the RP shall keep a complete record for each transaction showing: (a) The type of contract, limits, underwriting restrictions, classes, or risks and territory; (b) The period of coverage, including effective and expiration dates, cancellation provisions, and notice required of cancellation; (c) The reporting and settlement requirements of balances; (d) The rate used to compute the reinsurance premium; (e) The names and addresses of assuming reinsurers; (f) The rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RP; (g) Related correspondence and memoranda; (h) Proof of placement; (i) Details regarding retrocessions handled by the RP including the identity of retrocessionaires and the percentage of each contract assumed or ceded; (j) Financial records, including but not limited to premium and loss accounts; and (k) When the RP procures a reinsurance contract on behalf of a licensed ceding insurer: (I) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or Colorado Revised Statutes 2019 Page 98 of 943 Uncertified Printout (II) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative. (2) The insurer shall have access and the right to copy and audit all accounts and records maintained by the RP related to its business in a form usable by the insurer. Source: L. 93: Entire article R&RE, p. 1377, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-305 as it existed prior to 1993. 10-2-906. Duties of insurers utilizing the services of a reinsurance intermediaryproducer. (1) An insurer shall not engage the services of any person, firm, association, or corporation to act as an RP on its behalf unless such person is licensed as required by section 102-903 (1). (2) An insurer may not employ an individual who is employed by an RP with which it transacts business, unless such RP is under common control with the insurer and subject to the provisions of part 8 of article 3 of this title. (3) The insurer shall annually obtain a copy of statements of the financial condition of each RP with which it transacts business. Source: L. 93: Entire article R&RE, p. 1378, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-306 as it existed prior to 1993. 10-2-907. Required contract provisions - reinsurance intermediary-managers. (1) Transactions between an RM and the reinsurer such RM represents shall only be entered into pursuant to a written contract specifying the responsibilities of each party, which shall be approved by the reinsurer's board of directors. At least thirty days before such reinsurer assumes or cedes business through such producer, a true copy of the approved contract shall be filed with the commissioner for approval. The contract shall, at a minimum, contain provisions that incorporate all of the following: (a) The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination. (b) The RM shall render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the RM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis; (c) All funds collected for the reinsurer's account shall be held by the RM in a fiduciary capacity in a bank that is a qualified United States financial institution as defined in section 101-102 (17). The RM may retain no more than three months' estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that such RM represents. (d) For at least ten years after expiration of each contract of reinsurance transacted by the RM, the RM shall keep a complete record for each transaction showing: (I) The type of contract, limits, underwriting restrictions, classes, or risks and territory; Colorado Revised Statutes 2019 Page 99 of 943 Uncertified Printout (II) The period of coverage, including effective and expiration dates, cancellation provisions, notice required for cancellation, and disposition of outstanding reserves on covered risks; (III) The reporting and settlement requirements of balances; (IV) The rate used to compute the reinsurance premium; (V) The names and addresses of reinsurers; (VI) The rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM; (VII) Related correspondence and memoranda; (VIII) Proof of placement; (IX) Details regarding retrocessions handled by the RM, as permitted by section 10-2909 (4), including the identity of retrocessionaires and percentage of each contract assumed or ceded; (X) Financial records, including but not limited to premium and loss accounts; and (XI) When the RM places a reinsurance contract on behalf of a ceding insurer: (A) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (B) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative; (e) The reinsurer shall have access and the right to copy all accounts and records maintained by the RM related to such RM's business in a form usable by the reinsurer; (f) The contract cannot be assigned in whole or in part by the RM; (g) The RM shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks; (h) The contract sets forth the rates, terms, and purposes of commissions, charges, and other fees which the RM may levy against the reinsurer; (i) (I) If the contract permits the RM to settle claims on behalf of the reinsurer, all claims shall be reported to the reinsurer in a timely manner. (II) A copy of the claim file shall be sent to the reinsurer at its request or as soon as it becomes known that the claim: (A) Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer; (B) Involves a coverage dispute; (C) May exceed the RM claims settlement authority; (D) Is open for more than six months; or (E) Is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer; (III) All claim files shall be the joint property of the reinsurer and RM; however, upon an order of liquidation of the reinsurer, such files shall become the sole property of the reinsurer or its estate; the RM shall have reasonable access to and the right to copy the files on a timely basis; (IV) Any settlement authority granted to the RM may be terminated for cause upon the reinsurer's written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination. Colorado Revised Statutes 2019 Page 100 of 943 Uncertified Printout (j) If the contract provides for a sharing of interim profits by the RM, that such interim profits will not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business or a later period set by the commissioner for specified lines of insurance and not until the adequacy of reserves on remaining claims has been verified pursuant to section 10-2-909 (3); (k) The RM shall annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant; (l) The reinsurer shall periodically and at least semiannually conduct an on-site review of the underwriting and claims processing operations of the RM; (m) The RM shall disclose to the reinsurer any relationship such RM has with any insurer prior to ceding or assuming any business with such insurer pursuant to the contract; (n) The acts of the RM shall be deemed to be the acts of the reinsurer on whose behalf it is acting. Source: L. 93: Entire article R&RE, p. 1378, § 1, effective January 1, 1995. L. 2003: (1)(c) amended, p. 615, § 7, effective July 1. Editor's note: This section is similar to former § 10-2-307 as it existed prior to 1993. 10-2-908. Prohibited acts. (1) The RM shall not: (a) Bind retrocessions on behalf of the reinsurer; except that the RM may bind facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules. (b) Commit the reinsurer to participate in reinsurance syndicates; (c) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he is appointed; (d) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year; (e) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report shall be promptly forwarded to the reinsurer. (f) Jointly employ an individual who is employed by the reinsurer; (g) Appoint a sub-RM. Source: L. 93: Entire article R&RE, p. 1381, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-308 as it existed prior to 1993. 10-2-909. Duties of reinsurers utilizing the services of a reinsurance intermediarymanager. (1) A reinsurer shall not engage the services of any person, firm, association, or Colorado Revised Statutes 2019 Page 101 of 943 Uncertified Printout corporation to act as an RM on its behalf unless such person is licensed as required by section 10-2-903 (2). (2) The reinsurer shall annually obtain a copy of statements of the financial condition of each RM which such reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner. (3) If an RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other required loss reserve certification. (4) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM. (5) Within thirty days of termination of a contract with an RM, the reinsurer shall provide written notification of such termination to the commissioner. (6) A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder, or subproducer of its RM. This subsection (6) shall not apply to relationships governed by part 8 of article 3 of this title. Source: L. 93: Entire article R&RE, p. 1382, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-309 as it existed prior to 1993. 10-2-910. Examination authority. (1) A reinsurance intermediary shall be subject to examination by the commissioner. The commissioner shall have access to all books, bank accounts, and records of the reinsurance intermediary in a form usable to the commissioner. (2) An RM may be examined as if it were the reinsurer. Source: L. 93: Entire article R&RE, p. 1382, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-310 as it existed prior to 1993. 10-2-911. Penalties and liabilities. (1) A reinsurance intermediary, insurer, or reinsurer found by the commissioner, after a hearing conducted in accordance with article 4 of title 24, C.R.S., to be in violation of any provision of this part 9 shall: (a) For each separate violation, pay a penalty in an amount not to exceed five thousand dollars; (b) Be subject to revocation or suspension of its license; and (c) If a violation was committed by the reinsurance intermediary, such reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to such violation. (2) The decision, determination, or order of the commissioner pursuant to subsection (1) of this section shall be subject to judicial review by the court of appeals pursuant to section 24-4106 (11), C.R.S. (3) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided in this title. Colorado Revised Statutes 2019 Page 102 of 943 Uncertified Printout (4) Nothing contained in this part 9 is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors, or other third parties or confer any rights to such persons. Source: L. 93: Entire article R&RE, p. 1382, § 1, effective January 1, 1995. Editor's note: (1) This section is similar to former § 10-2-311 as it existed prior to 1993. (2) In 2006, the provisions within subsection (1) were relettered to return the subsection to its original form as adopted in House Bill 93-1270. 10-2-912. Rules and regulations. The commissioner may adopt reasonable rules and regulations for the implementation and administration of the provisions of this part 9. Source: L. 93: Entire article R&RE, p. 1382, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-312 as it existed prior to 1993. PART 10 MANAGING GENERAL AGENTS ACT 10-2-1001. Short title. This part 10 shall be known and may be cited as the "Managing General Agents Act". Source: L. 93: Entire article R&RE, p. 1383, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-401 as it existed prior to 1993. 10-2-1002. Definitions. As used in this part 10, unless the context otherwise requires: (1) "Insurer" means any person, firm, association, or corporation duly licensed in this state as an insurance company pursuant to the applicable provisions of the insurance laws. (2) (a) "Managing general agent", referred to in this part 10 as "MGA", means any person, firm, association, or corporation who negotiates and binds ceding reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer, including the management of a separate division, department, or underwriting office, and acts as an agent for such insurer whether known as a managing general agent, manager, or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premium equal to or more than five percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or both of the following: (I) Adjusts or pays claims in excess of an amount determined by the commissioner; or (II) Negotiates reinsurance on behalf of the insurer. (b) Notwithstanding the provisions of paragraph (a) of this subsection (2), the following persons shall not be considered an MGA for the purposes of this part 10: Colorado Revised Statutes 2019 Page 103 of 943 Uncertified Printout (I) An employee of the insurer; (II) A United States manager of the United States branch of an alien insurer; (III) An underwriting manager who, pursuant to contract, manages all the insurance operations of the insurer and who is under common control with the insurer subject to the provisions of part 8 of article 3 of this title and whose compensation is not based on the volume of premiums written; (IV) The attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or interinsurance exchange under powers of attorney. (3) "Underwrite" means the authority to accept or reject risk on behalf of the insurer. Source: L. 93: Entire article R&RE, p. 1383, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-402 as it existed prior to 1993. 10-2-1003. Licensure. (1) No person, firm, association, or corporation shall act in the capacity of an MGA with respect to risks located in this state for an insurer licensed in this state unless such person is a licensed producer in this state. (2) No person, firm, association, or corporation shall act in the capacity of an MGA representing an insurer domiciled in this state with respect to risks located outside this state unless such person is licensed as a producer in this state (such license may be a nonresident license) pursuant to the provisions of this part 10. (3) The commissioner may require a bond in an amount acceptable to the commissioner for the protection of the insurer. (4) The commissioner may require the MGA to maintain an errors and omissions policy. Source: L. 93: Entire article R&RE, p. 1384, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-403 as it existed prior to 1993. 10-2-1004. Required contract provisions. (1) No person, firm, association, or corporation acting in the capacity of an MGA shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party and where both parties share responsibility for a particular function, which specifies the division of such responsibilities, and which contains the following minimum provisions: (a) The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of any dispute regarding the cause for termination. (b) The MGA shall render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis. (c) All funds collected for the insurer's account shall be held by the MGA in a fiduciary capacity in a bank which is a member of the federal reserve system. This account shall be used for all payments on behalf of the insurer. The MGA may retain no more than three months' estimated claims payments and allocated loss adjustment expenses. (d) Separate records of business written by the MGA shall be maintained. The insurer shall have access and right to copy all accounts and records related to its business in a form Colorado Revised Statutes 2019 Page 104 of 943 Uncertified Printout usable by the insurer, and the commissioner shall have access to all books, bank accounts, and records of the MGA in a form usable to the commissioner. Such records shall be retained for a period of five years commencing no later than the effective date of the last financial examination of the insurer. (e) The contract may not be assigned in whole or part by the MGA. (f) (I) Appropriate underwriting guidelines which shall include: (A) The maximum annual premium volume; (B) The basis of the rates to be charged; (C) The types of risks which may be written; (D) Maximum limits of liability; (E) Applicable exclusions; (F) Territorial limitations; (G) Policy cancellation provisions; and (H) The maximum policy period. (II) The insurer shall have the right to cancel or nonrenew any policy of insurance subject to the applicable laws and regulations concerning the cancellation and nonrenewal of insurance policies. (g) (I) If the contract permits the MGA to settle claims on behalf of the insurer, all claims shall be reported to the company in a timely manner. (II) A copy of the claim file shall be sent to the insurer at its request or as soon as it becomes known that the claim: (A) Has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the company, whichever is less; (B) Involves a coverage dispute; (C) May exceed the MGA's claims settlement authority; (D) Is open for more than six months; or (E) Is closed by payment of an amount set by the commissioner or an amount set by the company, whichever is less. (III) All claim files shall be the joint property of the insurer and the MGA; however, upon an order of liquidation of the insurer, such files shall become the sole property of the insurer or its estate. The MGA shall have reasonable access to and the right to copy the files on a timely basis. (IV) Any settlement authority granted to the MGA may be terminated for cause upon the insurer's written notice to the MGA or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination. (h) Where electronic claims files are in existence, the contract must address the timely transmission of the data; (i) If the contract provides for a sharing of interim profits by the MGA, and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits shall not be paid to the MGA until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to section 10-21005. (2) The MGA shall not: Colorado Revised Statutes 2019 Page 105 of 943 Uncertified Printout (a) Bind reinsurance or retrocessions on behalf of the insurer; except that the MGA may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured, and commission schedules; (b) Commit the insurer to participate in insurance or reinsurance syndicates; (c) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which such producer is appointed; (d) Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent of the insurer's policyholder's surplus as of December 31 of the last completed calendar year; (e) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer. (f) Permit its subproducer to serve on the insurer's board of directors; (g) Jointly employ an individual who is employed with the insurer; (h) Appoint a sub-MGA. Source: L. 93: Entire article R&RE, p. 1384, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-404 as it existed prior to 1993. 10-2-1005. Duties of insurers. (1) The insurer shall have on file an independent financial examination, in a form acceptable to the commissioner, of each MGA with which it has done business. (2) If an MGA establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the MGA. This is in addition to any other required loss reserve certification. (3) The insurer shall periodically and at least semiannually conduct an on-site review of the underwriting and claims processing operations of the MGA. (4) Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the MGA. (5) Within thirty days of entering into or termination of a contract with an MGA, the insurer shall provide written notification of such appointment or termination to the commissioner. Notices of appointment of an MGA shall include a statement of duties which the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and any other information the commissioner may request. (6) An insurer shall review its books and records each quarter to determine if any producer has become an MGA as defined in section 10-2-1002 (2). If the insurer determines that a producer has become an MGA pursuant to section 10-2-1002 (2), the insurer shall promptly notify the producer and the commissioner of such determination and the insurer and producer shall fully comply with the provisions of this part 10 within thirty days. Colorado Revised Statutes 2019 Page 106 of 943 Uncertified Printout (7) An insurer shall not appoint to its board of directors an officer, director, employee, subproducer, or controlling shareholder of its MGA's. This subsection (7) shall not apply to relationships governed by part 8 of article 3 of this title. Source: L. 93: Entire article R&RE, p. 1387, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-405 as it existed prior to 1993. 10-2-1006. Examination authority. The acts of the MGA are considered to be the acts of the insurer on whose behalf the MGA is acting. An MGA may be examined as if said MGA were the insurer. Source: L. 93: Entire article R&RE, p. 1388, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-406 as it existed prior to 1993. 10-2-1007. Penalties and liabilities. (1) If the commissioner finds, after a hearing conducted in accordance with article 4 of title 24, C.R.S., that any person has violated any provision of this part 10, the commissioner may order: (a) For each separate violation, a penalty in an amount not to exceed five thousand dollars; (b) Revocation or suspension of the producer's license; and (c) The MGA to reimburse the insurer, the rehabilitator, or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this part 10 committed by the MGA. (2) The decision, determination, or order of the commissioner pursuant to subsection (1) of this section shall be subject to judicial review by the court of appeals pursuant to section 24-4106 (11), C.R.S. (3) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for in this title. (4) Nothing contained in this part 10 is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, and auditors. Source: L. 93: Entire article R&RE, p. 1388, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-407 as it existed prior to 1993. 10-2-1008. Rules and regulations. The commissioner may adopt reasonable rules and regulations for the implementation and administration of the provisions of this part 10. Source: L. 93: Entire article R&RE, p. 1388, § 1, effective January 1, 1995. Editor's note: This section is similar to former § 10-2-408 as it existed prior to 1993. PART 11 Colorado Revised Statutes 2019 Page 107 of 943 Uncertified Printout EFFECTIVE DATE - APPLICABILITY 10-2-1101. Effective date - applicability. This article shall take effect January 1, 1995. Insurance agent and broker licenses issued pursuant to part 2 of this article prior to said date shall expire at such time as the commissioner shall determine by rule promulgated under the authority of this article. The holders of such licenses may obtain comparable licenses under this article by complying with the rules promulgated by the commissioner under the authority of this article. Source: L. 93: Entire article R&RE, p. 1389, § 1, effective January 1, 1995. REGULATION OF INSURANCE COMPANIES ARTICLE 3 Regulation of Insurance Companies PART 1 GENERAL 10-3-101. Formation of insurance companies. (1) Whenever any number of persons associate to form an insurance company for any of the purposes named in section 10-3-102, they shall submit articles of incorporation to the commissioner and attorney general for examination. After being approved by the commissioner and the attorney general, the articles shall be filed in the office of the secretary of state, who shall issue a certificate of incorporation. A copy of such articles, certified by the secretary of state, shall be filed with the commissioner. Any filings made pursuant to this subsection (1) may be in an electronic format. (2) When not less than the amount required by section 10-3-201 has been paid in by the incorporators and deposited with the commissioner, as provided for in this title (except article 15) and article 14 of title 24, C.R.S., the commissioner shall cause an examination to be made either by the commissioner or some disinterested person especially appointed by the commissioner for the purpose, who shall certify that said provisions have been complied with by said company, as far as applicable thereto. Such certificate shall be filed in the office of the commissioner, who shall thereupon deliver to such company a certified copy thereof, which, together with a copy of the articles of incorporation, shall be filed in the office of the recorder of deeds of the county wherein the company is to be located, before the authority to commence business is granted. Any filings required to be made with the commissioner pursuant to this subsection (2) may be in an electronic format. (3) Whenever any such corporation thereafter desires to amend its articles of incorporation, it shall file its certificate of amendment with the commissioner before filing the same with the secretary of state, and if the commissioner, with the advice of the attorney general, finds the same to be legally adopted and in due legal form and not in conflict with the provisions of law governing such companies, then and not otherwise such certificate of amendment shall be Colorado Revised Statutes 2019 Page 108 of 943 Uncertified Printout filed with the secretary of state. Filings required pursuant to this subsection (3) may be in an electronic format. (4) To supplement the examination powers of the commissioner, as provided in this article, the commissioner may request or require a company, entity, or applicant, or the company, entity, or applicant may make a request to the commissioner, to be examined by independent examiners certified by the society of financial examiners, actuaries who are members of the American academy of actuaries, or other qualified loss reserve specialists, independent risk managers, independent certified public accountants, or other qualified examiners of insurance companies deemed competent by the commissioner, or any combination of such qualified persons. The commissioner may also accept as part of his examination reports made by any qualified person pursuant to this subsection (4). Neither such persons nor members of their immediate families shall be officers of, connected with, or financially interested in the entity, company, or applicant being examined other than as policyholders, nor shall they be financially interested in any other corporation or person affected by the examination, investigation, or hearing. The commissioner shall establish guidelines for assuring the neutrality of those persons to be authorized to supplement the examination procedures authorized in this article. The reasonable expenses and charges of such persons so retained or designated shall be paid directly by the company, entity, or applicant to any such outside authorized examiner. Source: L. 13: p. 345, § 30. L. 15: p. 269, § 1. L. 21: p. 455, § 4. C.L. § 2501. CSA: C. 87, § 28. L. 41: p. 501, § 1. CRS 53: § 72-1-42. C.R.S. 1963: § 72-1-42. L. 89: (4) added, p. 432, § 2, effective June 7. L. 91: (4) amended, p. 1242, § 3, effective July 1. L. 92: (2) amended, p. 1535, § 22, effective May 20. L. 2004: (1), (2), and (3) amended, p. 1058, § 3, effective July 1. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1501, § 18, effective July 1. Cross references: For the necessity of certificate of authority to do insurance business, see § 10-3-105. 10-3-102. Purpose of organization or admittance. (1) Any domestic insurance company having the required amount of capital or guaranty fund and surplus, when permitted by its articles of incorporation or charter, may be authorized and licensed by the commissioner to make insurance under one of the following paragraphs: (a) To make insurance or reinsurance on dwelling houses, stores, and all kinds of buildings and household furniture, and other property against loss or damage, including loss of use or occupancy, by fire, lightning, windstorm, tornado, cyclone, earthquake, hail, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, and by explosion whether fire ensues or not; also against loss or damage by water or other fluid to any goods or premises arising from the breakage or leakage of sprinklers, pumps, or other apparatus erected for extinguishing fires or of other conduits or containers or by waters entering through leaks or openings in buildings and of water pipes, and against accidental injury to such sprinklers, pumps, apparatus, conduits, containers, or water pipes, and upon vessels, boats, cargoes, goods, merchandise, freights, and other property against loss or damage by any of the risks of lake, river, canal, inland, and ocean navigation and transportation, including all personal property floater risks and including insurance upon automobiles and all types of aircraft, whether stationary or being operated under their own power, which include all of the hazards of fire, Colorado Revised Statutes 2019 Page 109 of 943 Uncertified Printout explosion, transportation, collision, loss by legal liability for damage to persons and to property resulting from the maintenance and use of automobiles, and airplanes, seaplanes, dirigibles, or other aircraft, and loss by burglary or theft, vandalism, or malicious mischief, or the wrongful conversion, disposal, or concealment of automobiles, and all types of aircraft, whether held under conditional sale contract or subject to chattel mortgages or any one or more of such hazards; (b) To make insurance or reinsurance upon the lives of persons, and every insurance pertaining thereto or connected therewith, including health and accident insurance, and to grant, purchase, or dispose of annuities, group annuities, unallocated annuities, guaranteed investment contracts, and funding agreement contracts; (c) To make any of the following kinds of insurance, or reinsurance: (I) Upon the health of persons; (II) Against injury, disablement, or death of persons, resulting from traveling or from accidents by land or water; (III) Upon the lives of horses, cattle, and other livestock; (IV) Upon plate glass against breakage; (V) Upon steam boilers, flywheels, and other forms of liability insurance, against explosion and against loss by damage to life or property resulting therefrom; (VI) Against loss by burglary or theft or both; (VII) To engage in the business of suretyship, and guaranteeing the fidelity of persons holding places of trust, public or private; (VIII) Full coverage for motor vehicles; (IX) All forms of casualty insurance, including all personal property floater risks. (d) To make insurance or reinsurance upon any of the risks set forth in paragraphs (a) and (c) of this subsection (1). (e) To make title insurance or reinsurance. (2) Any foreign or alien insurance company having the required amount of capital or guaranty fund, surplus, and deposit, when permitted by its articles of incorporation or charter and by the proper insurance supervisory authority of its domiciliary jurisdiction, may be authorized and licensed by the commissioner to make insurance under any one of the subsections of this section if otherwise qualified according to law. (3) No foreign, alien, or domestic insurance company, excluding life insurance companies and title insurance companies, shall expose itself to loss in an amount exceeding ten percent of its paid-up capital or guaranty fund and surplus on any one risk or hazard, unless the same is reinsured through an insurance company which is licensed or accredited in this state, or otherwise through an insurance company acceptable to the commissioner. (4) Any insurance company authorized to transact the business of title insurance under section 72-1-41 (4)(i), C.R.S. 1963, prior to July 1, 1969, shall not, by reason of the provisions of this part 1, be prohibited from transacting said business. Source: L. 13: p. 344, § 29. C.L. § 2500. CSA: C. 87, § 27. L. 47: p. 597, § 1. L. 51: p. 481, § 1. CRS 53: § 72-1-41. L. 57: p. 458, § 1. C.R.S. 1963: § 72-1-41. L. 69: p. 527, §§ 3, 4. L. 92: (3) amended, p. 1423, § 3, effective July 1. L. 2000: (1)(b) amended, p. 1729, § 1, effective August 15. Colorado Revised Statutes 2019 Page 110 of 943 Uncertified Printout Cross references: For the nonapplicability of subsection (3) to pure captive insurance companies, see § 10-6-130 (1). 10-3-103. Names of companies. No domestic insurance company shall adopt the name of any existing company transacting a similar business nor any name so similar as to be calculated to mislead the public, but any domestic mutual or mutual assessment insurance company, upon complying with the terms and conditions of this title (except article 15), and article 14 of title 24, C.R.S., may be reorganized and reincorporated as a joint stock company under the same name by which it was incorporated as a mutual or assessment company, with the omission of the word "mutual", and it is unlawful for any other company to be incorporated or transact business under or by the name under which any such mutual or mutual assessment company was operating at the time of reincorporation. Source: L. 13: p. 334, § 19. C.L. § 2489. CSA: C. 87, § 17. CRS 53: § 72-1-15. C.R.S. 1963: § 72-1-15. L. 92: Entire section amended, p. 1535, § 23, effective May 20. L. 2004: Entire section amended, p. 898, § 9, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1501, § 19, effective July 1. 10-3-104. Unauthorized companies - penalties. Except for reinsurance by an authorized insurer or insurance effected pursuant to the provisions of article 5 or article 15 of this title, it is unlawful for any person, company, or corporation in this state to procure, receive, or forward applications for insurance in, or to issue or to deliver policies for, any company not legally authorized to do business in this state, as provided in this title and article 14 of title 24, C.R.S. Any person violating the provisions of this section commits a class 1 misdemeanor and shall be punished as provided in section 18-1.3-501, C.R.S. Source: L. 13: p. 334, § 20. C.L. § 2490. CSA: C. 87, § 18. L. 49: p. 472, § 17. CRS 53: § 72-1-16. C.R.S. 1963: § 72-1-16. L. 92: Entire section amended, p. 1536, § 24, effective May 20. L. 2003: Entire section amended, p. 849, § 1, effective July 1. L. 2006: Entire section amended, p. 1490, § 9, effective June 1. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1502, § 20, effective July 1. 10-3-105. Certificate of authority to do business - companies prohibited definitions. (1) Except pursuant to the provisions of article 5 of this title, no foreign or domestic insurance company shall transact any insurance business in this state, unless it first procures from the commissioner a certificate of authority stating that the requirements of the laws of this state have been complied with and authorizing it to do business. The certificate of authority shall expire on June 30 each year and shall be renewed annually if the company has continued to comply with the laws of the state. (2) Except as provided by subsection (3) of this section, no certificate of authority to transact any kind of insurance business in this state shall be issued or renewed to any company which is owned, or financially controlled in whole or in part, by another state of the United States, or by a foreign government, or by any political subdivision, instrumentality, or agency of either, unless such company was so owned, controlled, or constituted prior to January 1, 1955, and also authorized to do business in this state on or prior to January 1, 1955. Colorado Revised Statutes 2019 Page 111 of 943 Uncertified Printout (3) (a) The ownership or financial control, in part, of any insurer by any state of the United States, or by a foreign government, or by any political subdivision, instrumentality, or agency of either shall not restrict the commissioner from issuing, renewing, or continuing in effect the license of that insurer to transact in this state the kinds of insurance business for which that insurer is otherwise qualified under the provisions of this title and under its charter, if the insurer has satisfied the commissioner that: (I) It is not subject to any form of subsidy; (II) It does not engage in practices that discriminate in violation of section 24-34-402, C.R.S.; (III) The ownership or financial control will not create the presence of any sovereign immunity in the insurer; (IV) Appropriate measures and controls exist to avoid security problems resulting from the insurer's access to confidential information and data of its insured; and (V) The ownership or financial control will not result in substantial or undue influence being asserted over the insurer. (b) The provisions of paragraph (a) of this subsection (3) are a clarification of the provisions of subsection (2) of this section and not a substantive change in the provisions of said subsection (2) as said subsection (2) existed prior to March 11, 1991. (4) (a) The commissioner may order an insurer to pay restitution to a person, if, after notice to the insurer and after a hearing held in accordance with sections 24-4-104 and 24-4-105, C.R.S., the commissioner finds that the insurer has violated this title or that the insurer is financially responsible for the unfair business practices of an insurance producer pursuant to section 10-3-131. (b) As used in this subsection (4), "insurance producer" shall have the same meaning as set forth in section 10-2-103 (6). (c) For the purposes of this subsection (4), "restitution" means benefits or moneys owed due to the regulated entity's violation of this title, including, but not limited to, costs and expenses for lost time from work and attorney fees. Source: L. 13: p. 334, § 21(1). C.L. § 2491. CSA: C. 87, § 19. L. 49: p. 472, § 18. CRS 53: § 72-1-17. C.R.S. 1963: § 72-1-17. L. 91: (2) amended and (3) added, p. 1239, § 1, effective March 11. L. 92: (1) amended, p. 1536, § 25, effective July 1. L. 2008: (4) added, p. 585, § 2, effective August 5; (4)(c) amended, p. 2174, § 6, effective August 5. Cross references: For acts which constitute transacting business by an unauthorized insurer, see § 10-3-903. 10-3-106. Deemed incorporated under corporation law. All insurance companies having capital stock, incorporated under the laws of this state, are deemed to be incorporated under the general corporation laws of this state; but, excepting any provision of existing insurance laws which may purport to prescribe the law under which insurance companies may be or have been incorporated, no law or provision of law specially or expressly applicable to insurance companies or the business of insurance shall be in any way repealed, modified, or affected by this section. Colorado Revised Statutes 2019 Page 112 of 943 Uncertified Printout Source: L. 33: p. 615, § 3. CSA: C. 87, § 53. CRS 53: § 72-1-51. C.R.S. 1963: § 72-151. Cross references: For the general corporation law, see § 7-101-101 et seq. 10-3-107. Appointment of registered agent - commissioner agent for service of process. (1) Except pursuant to the provisions of article 5 of this title, no foreign insurance company, directly or indirectly, shall issue policies, take risks, or transact business in this state until it has first appointed, in writing, the commissioner to be the true and lawful attorney of such company in and for this state, upon whom all lawful process in any action or proceeding against the company may be served with the same effect as if the company existed in this state. Such power of attorney shall stipulate and agree, upon the part of the company, that any lawful process against the company that is served on said attorney, or in the commissioner's absence any employee in charge of the commissioner's office, shall be of the same legal force and validity as if served on the company and that the authority shall continue in force so long as any liability remains outstanding against the company in this state. A certificate of such appointment, duly certified and authenticated, shall be filed in the office of the commissioner, and copies certified by the commissioner shall be deemed sufficient evidence, and service upon such attorney shall be deemed sufficient service upon the principal. The certificate of appointment may be filed in an electronic format. (1.5) (a) The provisions of subsection (1) of this section shall not apply to any insurance company maintaining a home office or a regional home office in this state. (b) Each insurance company maintaining a home office or regional home office in this state shall file with the commissioner the name of a person designated to receive service of process. The commissioner shall maintain a list of persons so designated and shall make information from such list available to any person upon request. Each company must report any change in the name of the person designated to receive service of process to the commissioner within ten days after making such change. The information required to be filed with the commissioner pursuant to this subsection (1.5) may be filed in an electronic format. (2) Whenever lawful process against any insurance company is served upon the commissioner, three copies shall be furnished, and he shall forthwith forward a copy of the process served on him by certified mail, postpaid, to the secretary of the company or, in case of companies of foreign countries, to the resident manager in this country, and he shall also forward a copy thereof to the general agent of said company in this state. Source: L. 13: p. 339, § 22. C.L. § 2492. CSA: C. 87, § 20. L. 49: p. 473, § 19. CRS 53: § 72-1-33. C.R.S. 1963: § 72-1-33. L. 73: p. 847, § 1. L. 86: (2) amended, p. 554, § 2, effective July 1. L. 89: (2) amended, p. 436, § 4, effective July 1. L. 91: (2) amended, p. 1228, § 2, effective June 5; (1.5) added, p. 1243, § 4, effective July 1. L. 2004: (1) and (1.5)(b) amended, p. 1059, § 4, effective July 1. 10-3-108. File duly certified copy of charter. Except pursuant to the provisions of article 5 of this title, no foreign insurance company shall transact any business in this state unless it first files in the office of the commissioner a duly certified copy of its charter, articles of incorporation, or deed of settlement, together with a statement, under oath, of the president and Colorado Revised Statutes 2019 Page 113 of 943 Uncertified Printout secretary, or other chief officers of such company, showing the condition of affairs of such company on the thirty-first day of December next preceding the date of such oath. The statement shall be in the same form and shall set forth the same particulars as the annual statement required by this title (except article 15) and article 14 of title 24, C.R.S. After filing its articles of incorporation or charter with the secretary of state, no insurance company shall be required to file its annual report or any other instrument, except amendments to said articles of incorporation or charter, in the office of the secretary of state or to pay to the secretary of state an annual corporation tax. The filings required pursuant to this section may be made in an electronic format. Source: L. 13: p. 339, § 23. C.L. § 2493. CSA: C. 87, § 21. L. 49: p. 473, § 20. CRS 53: § 72-1-34. C.R.S. 1963: § 72-1-34. L. 92: Entire section amended, p. 1536, § 26, effective May 20. L. 2004: Entire section amended, p. 1060, § 5, effective July 1. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1502, § 21, effective July 1. 10-3-109. Reports, statements, assessments, and maintenance of records publication - penalties for late filing, late payment, or failure to maintain. (1) Every insurance company doing business in this state, on or before the first day of March in each year, shall submit to the commissioner a report, signed and certified by its chief officers, of its condition on the preceding thirty-first day of December, which shall include a detailed statement of assets and liabilities, the amount and character of its business transacted, and moneys received and expended during the year, and any further details of expenditures, and such other information, to be included in the report or supplementary thereto, as the commissioner deems necessary. A synopsis of such statement, together with the commissioner's certificate of authority to transact business in this state, shall be published in some newspaper of general circulation, published at the state capital, for at least four insertions. Such publication shall be made within thirty days after such certificate of authority is issued, and a copy of the paper containing such publication shall be filed in the office of the commissioner. The commissioner shall revoke and refuse to reissue the certificate of authority of any insurance company failing or refusing to furnish the reports or other information requested by the commissioner as provided in this section. The report required pursuant to this subsection (1) may be filed in an electronic format. (2) Repealed. (3) If any entity regulated by the division of insurance fails to file any other document required by law or rules and regulations to be filed with the division of insurance or fails to maintain complaint records as required by law, the commissioner may assess a penalty not to exceed five hundred dollars for an initial violation and a penalty not to exceed five thousand dollars for any subsequent failure to comply with any such filing requirement or requirement to maintain records. The commissioner, by rule and regulation, may establish a schedule for the assessment of penalties as authorized in this subsection (3) based upon the frequency and severity of noncompliance. Source: L. 13: p. 340, § 24. C.L. § 2494. CSA: C. 87, § 22. CRS 53: § 72-1-35. C.R.S. 1963: § 72-1-35. L. 92: Entire section amended, p. 1536, § 27, effective May 20. L. 2001: (2) Colorado Revised Statutes 2019 Page 114 of 943 Uncertified Printout amended, p. 1051, § 35, effective July 1. L. 2004: (1) amended, p. 1060, § 6, effective July 1. L. 2013: (2) amended, (HB 13-1115), ch. 338, p. 1970, § 3, effective May 28. Editor's note: Subsection (2)(b) provided for the repeal of subsection (2), effective March 31, 2015. (See L. 2013, p. 1970.) Cross references: For financial statements, see § 10-3-208; for nondisclosure of reports during periods of supervision or conservatorship, see § 10-3-414. 10-3-110. Remuneration of company officials. (Repealed) Source: L. 13: p. 354, § 52. C.L. § 2525. CSA: C. 87, § 67. CRS 53: § 72-3-14. C.R.S. 1963: § 72-3-14. L. 71: p. 718, § 1. L. 81: Entire section repealed, p. 524, § 1, effective March 27. 10-3-111. Violations - penalty. Except for violations of section 10-3-104 or article 15 of this title, any officer, director, stockholder, attorney, or agent of any corporation or association who violates any of the provisions of this title and article 14 of title 24, C.R.S., who participates in or aids, abets, or advises or consents to any such violation, and any person who solicits or knowingly receives any money or property in violation of said references, is guilty of a misdemeanor and, upon conviction thereof, shall be punished by imprisonment in the county jail for not more than one year and by a fine of not more than one thousand dollars, and any officer aiding or abetting in any contribution made in violation of said references is liable to the company or association for the amount so contributed. No person shall be excused from attending and testifying or producing any books, papers, or other documents, before any court, upon any investigation, proceeding, or trial, for a violation of any of the provisions of said references upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of such person may tend to incriminate or degrade him or her; but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he or she may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be used against him or her upon any criminal investigation or proceeding. Source: L. 13: p. 354, § 53. C.L. § 2526. CSA: C. 87, § 68. CRS 53: § 72-3-15. C.R.S. 1963: § 72-3-15. L. 83: Entire section amended, p. 448, § 1, effective March 15. L. 92: Entire section amended, p. 1537, § 28, effective May 20. L. 2003: Entire section amended, p. 849, § 2, effective July 1. L. 2005: Entire section amended, p. 761, § 12, effective June 1. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1502, § 22, effective July 1. 10-3-112. Directors - terms - election - conflicts of interest - recovery of profits. (1) (a) The business of insurance companies incorporated under the laws of this state shall be managed by a board of directors consisting of such number of directors, not less than three, as may be prescribed by the articles of incorporation or bylaws, and said directors shall hold office until their successors are duly elected and qualified. Such directors shall be nominated and elected in the manner prescribed by the bylaws of the company not inconsistent with the laws of Colorado Revised Statutes 2019 Page 115 of 943 Uncertified Printout this state. No director may serve who has been convicted of fraud involving any financial institution or of a felony, but the commissioner may waive this provision regarding a felony if he or she determines that the particular felony does not jeopardize the person's ability to act as a director. (b) (I) Each executive officer and director of a domestic company applying for a certificate of authority to do business in Colorado shall submit a set of fingerprints to the commissioner. The commissioner shall forward such fingerprints to the Colorado bureau of investigation for the purpose of conducting a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. Only the actual costs of such record check must be borne by the employer. (II) When the results of a fingerprint-based criminal history record check of a person performed pursuant to this subsection (1)(b) reveal a record of arrest without a disposition, the commissioner shall require that person to submit to a name-based criminal history record check, as defined in section 22-2-119.3 (6)(d). (2) Every domestic insurance company shall report within thirty days to the commissioner any change in its executive officers or directors, including in its report a statement of the business and professional affiliations of any new executive officer or director. For purposes of this subsection (2), the term "executive officer" includes only the following: Chairman of the board of directors, president, executive vice-president, secretary, and treasurer. (3) No director, officer, or employee having any authority in the investment or disposition of the funds of a domestic insurance company shall accept, except on behalf of the company, or be the beneficiary of any fee, brokerage, gift, or other emolument because of any investment, loan, deposit, purchase, sale, payment, or exchange made by or for the company; but a director who is not otherwise an officer or employee of the company may receive reasonable compensation for necessary services performed for sales or purchases made to or for the company in the ordinary course of its business and in the usual private professional or business capacity of such director. (4) Any profit or gain received by or on behalf of any person in violation of subsection (3) of this section shall inure to and be recoverable by the company. Suit to recover such profit may be instituted in any court of competent jurisdiction by the company, or by any stockholder of the company in its name and in its behalf if the company fails or refuses to bring such suit within sixty days after request in writing or fails diligently to prosecute the same thereafter; but no such suit shall be brought more than two years after the date such profit was realized. Source: L. 13: p. 346, § 31. C.L. § 2502. L. 33: p. 614, § 1. CSA: C. 87, § 29. CRS 53: § 72-1-43. C.R.S. 1963: § 72-1-43. L. 67: p. 163, § 1. L. 69: p. 510, § 1. L. 2002: (1) amended, p. 970, § 1, effective June 1. L. 2019: (1)(b) amended, (HB 19-1166), ch. 125, p. 537, § 2, effective April 18. 10-3-113. Increase of capital. (1) Any such corporation organized and duly licensed by the commissioner to conduct an insurance business may sell additional stock or increase its capital for the purpose, in the manner, and to the extent prescribed by law, but the expense incurred in connection with such sale shall not exceed twenty percent of the amount realized Colorado Revised Statutes 2019 Page 116 of 943 Uncertified Printout from the sale of its capital stock, whether in cash or notes, and said expense shall be paid from surplus funds of the corporation. (2) The provisions of this title (except article 15) and article 14 of title 24, C.R.S., also apply in the formation and authorization of domestic insurance companies formed upon the mutual plan, and to associations formed upon the assessment plan, that are organized with a guaranty fund in lieu of capital as provided in said references. Source: L. 13: p. 346, § 2. L. 15: p. 270, § 1. L. 21: p. 457, § 5. C.L. § 2503. CSA: C. 87, § 30. L. 41: p. 502, § 2. CRS 53: § 72-1-44. L. 57: p. 758, § 9. C.R.S. 1963: § 72-1-44. L. 92: (2) amended, p. 1538, § 29, effective May 20. L. 2004: (2) amended, p. 898, § 10, effective May 21. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1503, § 23, effective July 1. 10-3-114. Violations - penalty. Any officer, director, clerk, employee, or agent of any such company who receives or pays out, or orders the payment of, any money, or incurs any obligation for the payment of money, in violation of the terms of section 10-3-113 is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than five hundred dollars, or by imprisonment in the county jail for a term of not more than six months, or by both such fine and imprisonment. Source: L. 13: p. 346, § 33. C.L. § 2504. CSA: C. 87, § 31. CRS 53: § 72-1-45. C.R.S. 1963: § 72-1-45. 10-3-115. License required of foreign companies. (Repealed) Source: L. 13: p. 347, § 34. C.L. § 2505. CSA: C. 87, § 32. CRS 53: § 72-1-46. C.R.S. 1963: § 72-1-46. L. 92: Entire section repealed, p. 1538, § 30, effective May 20. 10-3-116. Sale of stock without license - penalty. (Repealed) Source: L. 13: p. 347, § 35. C.L. § 2506. CSA: C. 87, § 33. CRS 53: § 72-1-47. C.R.S. 1963: § 72-1-47. L. 92: Entire section repealed, p. 1538, § 31, effective May 20. 10-3-117. License automatically extended - when. When the annual statement of an insurance company licensed to do business in this state has been filed and the company's check or cash for the amount of all fees and taxes required has been tendered, the company's license to do business in this state shall be automatically extended until the commissioner refuses to relicense such company, and, when a check or cash for the fee has been tendered by the company for renewal of an agent's license, the license shall automatically be extended until the commissioner refuses to renew the license. Source: L. 25: p. 316, § 6. CSA: C. 87, § 47. CRS 53: § 72-2-7. C.R.S. 1963: § 72-2-6. Cross references: For statements generally, see § 10-3-109; for financial statements, see § 10-3-208. Colorado Revised Statutes 2019 Page 117 of 943 Uncertified Printout 10-3-118. Reinsurance - conditions - credit for reinsurance. (Repealed) Source: L. 25: p. 318, § 10. CSA: C. 87, § 51. L. 51: p. 488, § 1. CRS 53: § 72-2-12. C.R.S. 1963: § 72-2-10. L. 71: p. 707, § 1. L. 79: Entire section R&RE, p. 380, § 1, effective May 25. L. 85: (7)(a)(IV) added, p. 378, § 1, effective July 1. L. 86: (6)(c) and (6)(d) added, p. 554, § 3, effective July 1. L. 89: (6)(c) and (6)(d) amended, p. 436, § 5, effective July 1. L. 91: (6) amended, p. 1229, § 3, effective June 5. L. 92: Entire section amended, p. 1539, § 32, effective May 20. L. 95: (5)(d)(I) amended, p. 489, § 2, effective May 16. L. 2003: (5)(d)(I), IP(6), and (6)(c) amended, p. 615, § 8, effective July 1. L. 2005: Entire section amended, p. 552, § 1, effective August 8. L. 2014: Entire section repealed, (HB 14-1315), ch. 295, p. 1217, § 3, effective January 1, 2015. 10-3-119. Application for receivership. (Repealed) Source: L. 25: p. 319, § 11. CSA: C. 87, § 52. CRS 53: § 72-2-13. L. 63: p. 290, § 8. C.R.S. 1963: § 72-2-11. L. 92: Entire section repealed, p. 1424, § 4, effective July 1. 10-3-120. Investments of officers, directors, and principal stockholders. (1) (a) Every person who is directly or indirectly the beneficial owner of more than ten percent of any class of equity security of a domestic stock insurance company or who is a director or an officer of such company shall file in the office of the commissioner within ten days after the person becomes such beneficial owner, director, or officer, a statement, in such form as the commissioner may prescribe, of the amount of all classes of equity securities of such company of which the person is the beneficial owner and within ten days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the commissioner a statement, in such form as the commissioner may prescribe, indicating ownership at the close of the calendar month and such changes in ownership as have occurred during such calendar month. (b) (Deleted by amendment, L. 96, p. 111, § 1, effective March 25, 1996.) (2) For the purpose of preventing the unfair use of information which is obtained by such beneficial owner, director, or officer by reason of his relationship to such company, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than six months, unless such equity security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director, or officer in entering into such transaction of holding the equity security purchased or of not repurchasing the equity security sold for a period exceeding six months. Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the company or by the owner of any security of the company in the name and in behalf of the company if the company fails or refuses to bring such suit within sixty days after request or fails diligently to prosecute the same thereafter, but no such suit shall be brought more than two years after the date such profit was realized. This subsection (2) shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the equity security involved, or any transaction which the Colorado Revised Statutes 2019 Page 118 of 943 Uncertified Printout commissioner may by rules and regulations exempt as not comprehended within the purpose of this subsection (2). (3) It is unlawful for any such beneficial owner, director, or officer, directly or indirectly, to sell any equity security of such company if the person selling the equity security or his principal either does not own the equity security sold, or, if owning the equity security, does not deliver it against such sale within twenty days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation; but no person is deemed to have violated this subsection (3) if he proves that, notwithstanding the exercise of good faith, he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense. (4) The provisions of subsection (2) of this section shall not apply to any purchase and sale or sale and purchase, and the provisions of subsection (3) of this section shall not apply to any sale of an equity security not then or theretofore held by him in an investment account by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market, otherwise than on an exchange, as presently defined in the federal "Securities Exchange Act of 1934", as amended, for such security. (5) The provisions of this section shall not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the commissioner may adopt in order to carry out the purposes of this section. (6) The term "equity security" means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the commissioner deems to be of similar nature and considers necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security. (7) The provisions of this section shall not apply to equity securities of a domestic stock insurance company if: (a) Such equity securities are registered, or are required to be registered, pursuant to section 12 of the federal "Securities Exchange Act of 1934", as amended; or (b) Such domestic stock insurance company does not have any class of its equity securities held of record by one hundred or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of this section, except for the provisions of this paragraph (b). Source: L. 65: p. 760, § 1. C.R.S. 1963: § 72-2-17. L. 95: (1) repealed, p. 196, § 7, effective April 13; (1) RC&RE, p. 718, § 1, effective May 23. L. 96: (1) amended, p. 111, § 1, effective March 25. L. 2008: (4) and (7)(a) amended, p. 1880, § 10, effective August 5. Cross references: For the "Securities Exchange Act of 1934", see 15 U.S.C. § 78a et seq. 10-3-121. Regulation of proxies, consents, or authorizations. (1) The purpose of this section is to regulate the solicitation of proxies, consents, or authorizations by domestic stock insurers having one hundred or more stockholders of record in accordance with the intent of Colorado Revised Statutes 2019 Page 119 of 943 Uncertified Printout congress as expressed in the "Securities Acts Amendments of 1964", by declaring unlawful certain solicitation practices and providing for the regulation thereof. (2) No person shall, in contravention of such rules and regulations as the commissioner may prescribe as necessary or appropriate in the public interest or for the protection of investors, solicit, or permit the use of his name to solicit, any proxy or consent or authorization in respect of any security of a domestic stock insurer having one hundred or more stockholders of record. (3) Unless proxies, consents, or authorizations in respect of a security of a domestic stock insurer are solicited by or on behalf of the management of the insurer from the holders of record of such security in accordance with the rules and regulations prescribed under subsection (2) of this section, prior to any annual or other meeting of the holders of such security, such insurer shall, in accordance with the rules and regulations prescribed by the commissioner, file with the commissioner and transmit to all holders of record of such security information substantially equivalent to the information which would be required to be transmitted if a solicitation were made. (4) This section is applicable to all domestic stock insurers having one hundred or more stockholders of record; except that this section shall not apply to any insurer if ninety-five percent or more of its stock is owned or controlled by a parent or an affiliated insurer and the remaining shares are held by less than five hundred stockholders. A domestic stock insurer that files with the securities and exchange commission forms of proxies, consents, and authorizations complying with the requirements of the federal "Securities Exchange Act of 1934", as amended, is exempt from the provisions of this section. (5) The term "person" as used in this section includes a natural person, corporation, partnership, and association. (6) Repealed. Source: L. 65: p. 763, § 1. C.R.S. 1963: § 72-2-18. L. 95: Entire section repealed, p. 196, § 8, effective April 13; entire section RC&RE, p. 718, § 2, effective May 23. L. 96: (6) repealed, p. 95, § 2, effective March 25. L. 2008: (4) amended, p. 1880, § 11, effective August 5. Cross references: For the "Securities Acts Amendments of 1964" and the "Securities Exchange Act of 1934", see 15 U.S.C. § 78a et seq. 10-3-122. Duties of foreign companies. Any foreign life or accident insurance company doing business in the state of Colorado, if the insurance contract is made in this state, shall pay its obligations when same are due and payable through its agent in the county where the contract was made, or at the office of its general agent within this state, after approval by the proper officers at the home office of the company, upon presentation of the insurance contract and proofs required thereunder by the insured, assigns, or beneficiaries. This insurance contract is deemed to be made and payable in the state of Colorado, if made through an authorized agent of such insurance company within this state, irrespective of where the insurance contract may be written. Source: L. 13: p. 357, § 58. C.L. § 2531. CSA: C. 87, § 75. CRS 53: § 72-3-22. C.R.S. 1963: § 72-3-22. Colorado Revised Statutes 2019 Page 120 of 943 Uncertified Printout Cross references: For life insurance generally, see § 10-7-101 et seq. 10-3-123. Assessment accident associations. (1) Every contract whereby a benefit is to accrue to a party named therein, upon the accidental death or physical disability from accident or sickness of a person, which benefit is in any degree conditioned upon the collection of an assessment upon persons holding similar contracts, is deemed a contract of accident or casualty insurance upon the assessment plan, and the business involving the issuance of such contract shall be carried on in this state only by duly authorized corporations, which are subject to the provisions and requirements of this section and the general laws governing insurance companies in this state, except as otherwise provided in this section; but nothing in this section shall be construed as applicable to organizations which conduct their business as fraternal societies, on the lodge system, or to organizations which do not employ paid agents in soliciting business or limit their certificate holders to a particular order or fraternity. (2) Twenty-five or more persons who are citizens of this state may form a corporation to carry on the business of casualty insurance on the assessment plan, but no such corporation shall begin to do business until a guaranty fund of at least ten thousand dollars is provided and deposited, in cash or in such securities as are permitted by law in the case of stock companies, with the commissioner under the conditions named in this title (except article 15) and article 14 of title 24, C.R.S. When this is done and at least two hundred persons have subscribed in writing to be insured, and when each has paid in at least one monthly assessment or premium, the commissioner, if the laws have been complied with, shall issue a certificate of authority for such corporation, which authorizes it to commence business. The word "association" shall be used in the title or name of all corporations organized under this section instead of the word "company". (3) Every policy or indemnity certificate issued by any casualty corporation doing business in this state shall show, in plain and legible print at the top and on the face of the same, these words: "Incorporated on the assessment plan". (4) There shall also be printed plainly and legibly in every such policy or certificate issued the minimum and maximum limits of the contingent mutual liability of the person to whom the policy is issued, which limits and the amount of liability, in the case of corporations incorporated under the Colorado laws, shall be fixed by the bylaws, and the rule shall be uniform. Such policies or certificates shall also specify the minimum sum of money to be paid upon each contingency insured against and the number of days after satisfactory proof of the happening of such contingency at which such payment shall be made. Upon the occurrence of such contingency, unless the contract has been voided by fraud or by breach of its conditions, the association is obligated to the beneficiary for such payment at the time and to the amount specified in the policy or certificate, and this indebtedness shall be a lien upon all the property, effects, and bills receivable of the association in this state, with priority over all indebtedness thereafter incurred, but the statement of said minimum sum shall not invalidate the rights of the party insured from receiving any further amount above such minimum sum that is based upon membership and to which he is entitled by the provisions of his policy. (5) Any corporation organized under the authority of any other state or government to issue policies or certificates of casualty insurance on the assessment plan, as a condition precedent to transacting business in this state, shall pay such fees and comply with the same requirements as exacted of stock casualty insurance companies of other states or countries, as provided by this title (except article 15) and article 14 of title 24, C.R.S., and thereafter be Colorado Revised Statutes 2019 Page 121 of 943 Uncertified Printout subject to the same general laws and penalties of this title, unless otherwise provided in this section, and it shall deposit with the commissioner or with the proper official of some other state, for the protection of all its policyholders, a sum not less than that required to be deposited by domestic casualty insurance companies organized upon the mutual assessment plan. Such corporation shall also file with the commissioner a copy of its policies or certificates and applications therefor, for approval by the commissioner, and a sworn statement from the proper officers of such corporation that they have received a copy of this section, and shall be governed thereby in issuing policies or certificates in this state. The commissioner may thereupon issue or renew the authority of such corporation to do business in this state. (6) The money or other benefit, charity, relief, or aid to be paid or provided or rendered by any corporation authorized to do casualty insurance on the assessment plan shall not be liable to attachment or other process and shall not be seized, taken, appropriated, or applied by any legal or equitable process, nor by operation of law, to pay any debts or liability of a policy or certificate holder, or any beneficiary named therein. (7) Any corporation doing a casualty insurance business in this state on April 15, 1913, that is incorporated to do business on the assessment plan may reincorporate under the provisions of this title (except article 15) and article 14 of title 24, C.R.S., but nothing in said references shall be construed as requiring any such corporation to reincorporate, and any such corporation may continue to exercise all rights, powers, and privileges conferred by said references, or its articles of incorporation not inconsistent with this subsection (7). Source: L. 13: p. 369, § 75. C.L. § 2548. CSA: C. 87, § 92. CRS 53: § 72-3-26. C.R.S. 1963: § 72-3-25. L. 92: (2), (5), and (7) amended, p. 1544, § 33, effective May 20. L. 2004: (2), (5), and (7) amended, p. 899, § 11, effective May 21. L. 2012: (2), (5), and (7) amended, (HB 12-1266), ch. 280, p. 1503, § 24, effective July 1. 10-3-124. Advertisement for insurance - requirement. (Repealed) Source: L. 73: p. 836, § 1. C.R.S. 1963: § 72-1-65. L. 77: Entire section repealed, p. 502, §§ 7, 8, effective January 1, 1978. 10-3-125. Redomestication of foreign insurers. (1) Any foreign insurer which is authorized or which may be authorized to do business in this state for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type. Said domestic insurer shall be entitled to like certificates and licenses to transact business in this state and shall be subject to the authority and jurisdiction of this state. (2) Any domestic insurer may, upon the approval of the commissioner, transfer its domicile to any other state in which it is authorized to transact the business of insurance and, upon such a transfer, shall cease to be a domestic insurer and shall be admitted to this state if qualified as a foreign insurer. The commissioner shall approve any such proposed transfer unless he determines that such transfer is not in the interest of the policyholders of this state. (3) Any foreign insurance company admitted or which may be admitted to transact business in this state may, upon proper notice to the commissioner, change its domicile by Colorado Revised Statutes 2019 Page 122 of 943 Uncertified Printout merger, consolidation, or otherwise to another foreign state without interruption of its license and without reapplying as a foreign insurer if: (a) The change in domicile does not result in a reduction in the company's assets or surplus below the requirements for admission as a foreign insurer; and (b) There is no substantial change in the lines of insurance to be written by the company; and (c) The change in domicile has been approved by the supervising regulatory officials of both the former and new state of domicile. (4) The certificate of authority, the agents' appointments and licenses, and the rates and other items which the commissioner allows, in his discretion, which are in existence at the time any insurer transfers its corporate domicile to this or any other state by merger, consolidation, or any other lawful method shall continue in full force and effect upon such transfer if such insurer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer shall remain in full force and effect. In the event of a company name change, all outstanding policies shall be endorsed with the company's new name. Every transferring insurer shall file new policy forms with the commissioner on or before the effective date of the transfer. Such insurers may use existing policy forms with appropriate endorsements if allowed by and under such conditions as approved by the commissioner. Every such transferring insurer shall notify the commissioner of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the commissioner. Source: L. 89: Entire section added, p. 443, § 1, effective April 19. 10-3-126. Alien insurers. (1) Any alien insurer, as defined in section 10-3-301 (1), may be admitted to do business in this state by qualifying and establishing an administrative office in this state and maintaining its corporate and insurance records in the United States for insurance of risks primarily in the United States of America, its territories, and its possessions and by complying with all of the requirements of law related to the organization and licensing of a domestic insurer of the same type. (2) Any alien insurer, as defined in section 10-3-301 (1), which is authorized to do business (whether as an admitted company or nonadmitted company) for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by making its principal place of business at a place in this state. Said domestic insurer shall be entitled to like certificates and licenses to transact business in this state and shall be subject to the authority and jurisdiction of this state. Source: L. 89: Entire section added, p. 444, § 1, effective April 19. 10-3-127. Domicile of nonprofit hospital, medical-surgical, and health services corporations. (1) A corporation organized under the laws of another state for the purposes set forth in section 10-16-302 may qualify under parts 1 and 3 of article 16 of this title to do business in this state as a nonprofit hospital, medical-surgical, and health services corporation, and upon notice to the commissioner may change its domicile by merger, consolidation, or Colorado Revised Statutes 2019 Page 123 of 943 Uncertified Printout otherwise under the procedures of section 10-3-125 for insurers. Except as specified in this section, any such corporation shall comply with all provisions of parts 1 and 3 of article 16 of this title with respect to the business of the corporation in this state. (2) The provisions of sections 10-16-304 (1) and 10-16-305 (1) shall apply to a foreign corporation to the extent such provisions do not conflict with the governing laws of the corporation's domicile. Source: L. 89: Entire section added, p. 444, § 1, effective April 19. L. 92: Entire section amended, p. 1723, § 3, effective July 1. 10-3-128. Domestic insurer - requirement to maintain offices in this state. (1) Before granting the initial certificate of authority to an applicant to become a domestic insurer, the commissioner shall be satisfied by proper evidence that: (a) The insurer's books and records are located or maintained in this state or are readily accessible to the examiners of this state; and (b) The grant of a certificate of authority as a domestic insurer will provide benefit to the state of Colorado through either significant economic development or through the offering of insurance coverage desired by and beneficial to the Colorado insurance buying public. (2) No later than January 1, 1992, any domestic insurer licensed in this state prior to July 1, 1991, shall file a plan for compliance with this section. (3) The commissioner may modify or waive the requirements of this section for cause on a case by case basis. (4) The commissioner may promulgate such rules and regulations as are necessary to carry out the provisions of this section. Source: L. 91: Entire section added, p. 1243, § 5, effective July 1. 10-3-129. Prohibition - display of social security number - insurance companies. (1) An insured may require that an insurance company or insurer doing business in Colorado not display the insured's social security number on his or her insurance identification card or proof of insurance card. If an insured makes the request, the insurance company or insurer shall reissue the insured an insurance identification card or proof of insurance card that does not display the insured's social security number. (2) After January 1, 2006, upon issuance or renewal of an insurance policy, an insurance company or insurer doing business in Colorado shall not issue an insurance identification card or proof of insurance card that displays the insured's social security number. Source: L. 2004: Entire section added, p. 1959, § 4, effective August 4. 10-3-130. Certificate of authority application process - tracking compliance with uniform process. The division shall make every effort to comply with the uniform process established and endorsed by the national association of insurance commissioners for applications for certificates of authority, including compliance with established deadlines for evaluating, approving, and denying applications for certificates of authority. The division shall track all aspects of the certificate of authority application process in order to monitor compliance with the Colorado Revised Statutes 2019 Page 124 of 943 Uncertified Printout uniform standards and to enable comparison with other states for purposes of determining areas for improvement. Source: L. 2006: Entire section added, p. 76, § 2, effective March 27. 10-3-131. Acts of producers - responsibility of insurer - definitions. (1) An insurer authorized to conduct business in this state, who knew or should have known about the unfair business practices of an insurance producer, may be financially responsible for the unfair business practices of the insurance producer, who, while acting on behalf of the insurer, engaged in unfair business practices that violate this title. (2) As used in this section, "insurance producer" shall have the meaning set forth in section 10-2-103. Source: L. 2008: Entire section added, p. 586, § 3, effective August 5. PART 2 FINANCIAL AFFAIRS 10-3-201. Cash capital - guaranty fund - deposit. (1) (a) (I) to (IV) Repealed. (V) No insurance company, issued a certificate of authority on or after July 1, 1995, shall be permitted to do any business in this state, unless, in addition to the other requirements of law, it possesses the minimum capital or guaranty fund and an accumulated surplus in the form of cash or marketable securities which combined are at least equal to: TYPE OF COMPANYTOTAL CAPITAL OR GUARANTY FUND PLUS SURPLUS Life ...................................$1,500,000.00 Fire ...................................1,500,000.00 Casualty ............................1,500,000.00 Multiple Line ....................2,000,000.00 Title Insurance ..................750,000.00 (b) To avoid situations where an insurer's transactions would create undue financial risks to its enrollees, subscribers, or policyholders or to the people of this state, the regulations specified in this paragraph (b) are authorized. The commissioner may by regulation establish standards consistent with those of the national association of insurance commissioners which require any insurer to maintain a greater minimum surplus level than the specific dollar minimums established by paragraph (a) of this subsection (1). Such minimum surplus level shall reflect the type, volume, and nature of the insurance business being transacted and the type of entity for which the surplus levels are being established. Such regulation may additionally require the submission of an opinion by a qualified actuary which states whether or not the surplus level of the entity is sufficient for the authority requested. Colorado Revised Statutes 2019 Page 125 of 943 Uncertified Printout (c) Companies already licensed on July 1, 1991, may continue to transact business and shall have until December 31, 1992, to increase their total capital or guaranty fund and surplus or file a plan with the commissioner. The commissioner may, upon showing of adequate justification by the company, extend the date for the company to attain the new levels specified in paragraph (a) of this subsection (1), or waive or reduce such new levels. (d) An insurance company subject to this section shall increase its capital and surplus to those limits set forth in paragraph (a) of this subsection (1) within thirty days after any change of control of the insurance company. Any extension granted pursuant to paragraph (c) of this subsection (1) shall be automatically rescinded in the event of such a change of control. The insurance company is not required to increase its capital and surplus if the transfer of ownership occurs because of death and the ownership is transferred solely to one or more natural persons, each of whom would be an heir of the decedent if the decedent had died intestate. (2) The cash or securities representing the minimum capital or guaranty fund and surplus required by paragraph (a) of subsection (1) of this section shall be deposited, in the case of domestic companies, with the commissioner in the manner provided by law and, in the case of foreign or alien companies, with the commissioner or with the duly authorized officer of some other state of the United States; except that the guaranty fund of mutual companies shall be construed to include deposits held for the benefit of policyholders as provided in this title (except article 15) and article 14 of title 24, C.R.S. (3) The deposit shall be held by the commissioner for the benefit of all policyholders wherever located. For a foreign or alien insurer to be allowed credit for deposits in other jurisdictions, such deposits must be held for the benefit of all policyholders wherever located and not solely or with preference for those in the depository jurisdiction. Source: L. 13: p. 340, § 25. C.L. § 2495. CSA: C. 87, § 23. L. 51: p. 466, § 1. CRS 53: § 72-1-36. L. 63: p. 570, § 1. C.R.S. 1963: § 72-1-36. L. 69: p. 527, § 2. L. 79: (1)(c) and (1)(d) added, p. 359, § 4, effective July 1. L. 91: (1) and (2) R&RE, p. 1244, § 6, effective July 1. L. 92: (1)(b) amended, p. 1766, § 2, effective March 20; (2) amended, p. 1545, § 34, effective May 20. L. 2004: (2) amended, p. 899, § 12, effective May 21. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1504, § 25, effective July 1. Editor's note: Subsections (1)(a)(I)(B), (1)(a)(II)(B), (1)(a)(III)(B), and (1)(a)(IV)(B) provided for the repeal of subsections (1)(a)(I), (1)(a)(II), (1)(a)(III), and (1)(a)(IV), respectively, effective July 1, 1992. (See L. 91, p. 1244.) Cross references: For deposit and safekeeping of securities, see § 10-3-210. 10-3-202. Surplus ascertained - disposition of. Surplus of domestic insurance companies shall be ascertained by offsetting as a liability against the company's admitted assets the par value of its outstanding capital stock, if any, its reserve liability, and its current obligations of every kind. The excess of said admitted assets over said liabilities shall be the company's surplus. Surplus of domestic stock insurance companies belongs to their stockholders, and such part of the surplus may be apportioned or paid to policyholders, beneficiaries, and annuity and supplementary contract holders as the companies may from time to time determine. Colorado Revised Statutes 2019 Page 126 of 943 Uncertified Printout Source: L. 25: p. 312, § 1. CSA: C. 87, § 42. CRS 53: § 72-2-2. C.R.S. 1963: § 72-2-1. L. 69: p. 491, § 2. L. 2004: Entire section amended, p. 1061, § 7, effective July 1. 10-3-203. Additional deposits - withdrawals. Any domestic insurance company depositing its insurance reserves with the commissioner under the optional reserve deposit law, section 10-7-101, at its option and in addition to its insurance reserves deposit, may also deposit with the commissioner approved securities not less in amount than the reserve required to mature any or all of the company's other contractual obligations of every kind designated at the time the deposits are made. Such additional deposits shall be to secure the payment of such other contractual obligations so designated. In determining the amount of deposit to be maintained with the commissioner on account of insurance or other reserves, he shall make proper deductions from the mathematical reserves for all indebtedness to the company on account of each policy and each contractual obligation not exceeding the reserve thereon, and for deferred and uncollected premiums on the policies and for the reserve on such part of each policy as may be reinsured as provided by law. Any amount at any time on deposit in excess of the amount required may be withdrawn by the depositing company. Whenever any such company makes an application to withdraw any excess deposit, the commissioner may accept the estimate or calculation of the company of such reserves or, at his option, may have a calculation or estimate thereof made for said purpose or an appraisal of the depositing company's securities, or both, at the expense of the company so applying, at such reasonable expense as may be agreed to by the company. Source: L. 31: p. 421, § 1. CSA: C. 87, § 55. CRS 53: § 72-3-3. C.R.S. 1963: § 72-3-3. 10-3-204. Payment of dividends. (1) The amount of dividend payments by any domestic insurance company is wholly within the discretion of its directors or of the duly constituted executive committee thereof. No dividend shall be paid except from the company's surplus. (2) It is unlawful for the directors, trustees, managers, or officers of any domestic insurance company, directly or indirectly, to make or pay any dividends or pay any interest, bonus, or other allowance in lieu of dividends, other than premium refunds and deductions guaranteed, except from the company's surplus and from profits arising from the company's business. Any person who is found guilty of violating any provision of this section shall be punished by a fine of not more than one thousand dollars. Source: L. 25: p. 313, § 2. L. 33: p. 615, § 2. CSA: C. 87, § 43. CRS 53: § 72-2-3. C.R.S. 1963: § 72-2-2. 10-3-205. Manner of paying surplus. Every policyholder on all participating policies issued shall be permitted at the time the first dividend is declared to select from among the options set forth in the policy the manner and method of the payment of the surplus to be annually apportioned to his policy. Source: L. 13: p. 353, § 49. C.L. § 2522. CSA: C. 87, § 63. CRS 53: § 72-3-10. C.R.S. 1963: § 72-3-10. Colorado Revised Statutes 2019 Page 127 of 943 Uncertified Printout 10-3-206. Security deposits - certificates. (1) The commissioner shall receive and hold on deposit, in the manner provided in this law, the securities of domestic companies that are deposited by any such company under the provisions of this title (except article 15) and article 14 of title 24, C.R.S., for the purpose of securing policyholders or to comply with any similar law of another state to enable the company to transact business in such state. All securities so offered for deposit shall belong to and be the sole property of such company and shall be free and clear of any claims whatsoever, and the commissioner shall determine the same by proper inquiry. (2) The commissioner shall furnish to such company a certificate, under his hand and official seal, certifying that he holds said securities in trust for the benefit of the policyholders of such company. Source: L. 13: p. 325, § 10. L. 21: p. 454, § 2. C.L. § 2480. CSA: C. 87, § 9. CRS 53: § 72-1-9. C.R.S. 1963: § 72-1-9. L. 92: (1) amended, p. 1545, § 35, effective May 20. L. 2004: (1) amended, p. 900, § 13, effective May 21. L. 2012: (1) amended, (HB 12-1266), ch. 280, p. 1504, § 26, effective July 1. Cross references: For procedure for deposit and commissioner's duty to safeguard, see § 10-3-210. 10-3-207. Fees paid by insurance companies. (1) Every entity regulated by the division in this state shall pay the following fees to the division: (a) For investigating and processing an initial application for authorization or licensure as a foreign or domestic insurance company to do business in this state, a nonrefundable fee of five hundred dollars, which fee shall accompany each application for authorization or licensure; (b) In each year subsequent to 1992, in addition to any fee collected under paragraph (a) of this subsection (1), every insurance company, interinsurance company, fraternal benefit society, health maintenance organization, and nonprofit hospital, medical-surgical, and health service corporation licensed or authorized in this state that is regulated by the division of insurance shall make an annual nonrefundable payment on or before March 1 of each year based on the schedule specified in this paragraph (b) at the time of authorization and each subsequent renewal year. For nonadmitted insurers and accredited reinsurers, the fee specified in this paragraph (b) shall be considered to include the fee pursuant to paragraph (a) of this subsection (1): (I) For insurance companies, interinsurance companies, fraternal benefit societies, health maintenance organizations, and nonprofit hospital, medical-surgical, and health service corporations that have prior year's direct written premiums, gross contract funds, or charges received in Colorado not exceeding one million dollars, a fee of six hundred seventy dollars; (II) For insurance companies, interinsurance companies, fraternal benefit societies, health maintenance organizations, and nonprofit hospital, medical-surgical, and health service corporations that have prior year's direct written premiums, gross contract funds, or charges received in Colorado in excess of one million dollars but not exceeding ten million dollars, a fee of two thousand ten dollars. Any insurance company that did not write at least eighty thousand dollars of taxable premiums in the previous year in Colorado shall not exceed the fee as otherwise would have been payable pursuant to subparagraph (I) of this paragraph (b). Colorado Revised Statutes 2019 Page 128 of 943 Uncertified Printout (III) For insurance companies, interinsurance companies, fraternal benefit societies, health maintenance organizations, and nonprofit hospital, medical-surgical, and health service corporations that have prior year's direct written premiums, gross contract funds, or charges received in Colorado in excess of ten million dollars, a fee of three thousand three hundred fortyfive dollars. Any insurance company that did not write at least one hundred twenty thousand dollars of taxable premium in Colorado shall not exceed the fee as otherwise would have been payable pursuant to subparagraph (II) of this paragraph (b). (c) (Deleted by amendment, L. 92, p. 1545, § 36, effective July 1, 1992.) (d) and (e) Repealed. (f) (I) For the purpose of providing adequate funds to the division for market analysis, investigation, and enforcement of article 11 of this title and rules adopted pursuant to said article 11, in addition to any other fee collected pursuant to this subsection (1), each title insurer regulated by the division pursuant to article 11 of this title shall pay a nonrefundable annual fee on or before March 1 of each year. This fee shall be established by the commissioner in an amount sufficient to support two full-time equivalents within the division. (II) Repealed. (III) Notwithstanding any provision of section 10-1-103 or 10-1-108 (9) to the contrary, all fees and surcharges collected pursuant to this paragraph (f) shall be transmitted to the state treasurer, who shall deposit the same in the division of insurance cash fund created in section 101-103, and shall be subject to annual appropriation to the division and to the department of law for the purposes set forth in this paragraph (f). (IV) Notwithstanding section 24-1-136 (11)(a)(I), commencing January 1, 2009, the division shall provide annual reports to the joint budget committee, the senate business, labor, and technology committee, and the house business affairs and labor committee, or any successor committees, and shall post on the division's website a statistical report of the number of enforcement actions taken, market trends associated with title insurance and real estate transactions, and consumer complaints supported by the fee in subparagraph (I) of this paragraph (f). (1.5) Every entity regulated by the division of insurance not identified in paragraph (b) of subsection (1) of this section shall pay a fee of five hundred dollars at the time of its license or authorization renewal. (2) Fees collected by the division of insurance pursuant to this section shall be transmitted to the state treasurer and credited to the division of insurance cash fund, created in section 10-1-103 (3). (3) (Deleted by amendment, L. 92, p. 1545, § 36, effective July 1, 1992.) (4) Fair and reasonable fees for various administrative services of the division of insurance, including but not limited to copying, record searches, computer listings, computer disks or tapes, and requests for any such services from individuals, shall be determined by the commissioner. (5) Notwithstanding the amount specified for any fee in this section, the commissioner by rule or as otherwise provided by law may reduce the amount of one or more of the fees if necessary pursuant to section 24-75-402 (3), C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of one or more of the fees is credited. After the uncommitted reserves of the fund are sufficiently reduced, the commissioner by rule or as otherwise provided Colorado Revised Statutes 2019 Page 129 of 943 Uncertified Printout by law may increase the amount of one or more of the fees as provided in section 24-75-402 (4), C.R.S. Source: L. 13: p. 331, § 14. C.L. § 2484. CSA: C. 87, § 12. L. 53: p. 369, § 1. CRS 53: § 72-1-12. L. 59: p. 507, § 2. C.R.S. 1963: § 72-1-12. L. 65: pp. 752, 753, §§ 1, 2. L. 71: p. 693, § 1. L. 77: (1)(q) added, p. 503, § 1, effective March 7. L. 78: (1)(h), (1)(i), (2)(d), and (2)(e) amended, p. 290, § 4, effective July 1. L. 86: (1)(d), (1)(e), (2)(d), and (2)(e) amended, p. 554, § 4, effective July 1. L. 89: (1)(d), (1)(e), (1)(j), (2)(d), and (2)(e) amended, p. 436, § 6, effective July 1. L. 91: Entire section amended, p. 1229, § 4, effective June 5. L. 92: Entire section amended, p. 1545, § 36, effective July 1. L. 95: IP(1)(b) amended, p. 490, § 3, effective May 16. L. 96: (1)(d) added, p. 684, § 1, effective August 1. L. 97: (1)(b) amended, p. 1413, § 5, effective June 3; (1)(e) added, p. 1043, § 5, effective August 6. L. 98: (5) added, p. 1325, § 26, effective June 1. L. 2006: (1)(e) amended, p. 1209, § 1, effective May 26; (1)(d) repealed, p. 1490, § 10, effective June 1. L. 2007: (1)(f) added, p. 1749, § 1, effective June 1. L. 2008: IP(1) amended, p. 1880, § 12, effective August 5. L. 2010: (1)(e) repealed, (HB 10-1385), ch. 204, p. 884, § 9, effective May 5. L. 2017: (1)(f)(IV) amended, (SB 17-044), ch. 4, p. 6, § 2, effective August 9. Editor's note: (1) Subsection (1)(f)(II)(B) provided for the repeal of subsection (1)(f)(II), effective July 1, 2008. (See L. 2007, p. 1749.) (2) Subsection (1)(e) was relocated to § 10-3-207.5 in 2010. Cross references: For disposition of fees, see § 10-1-108. 10-3-207.5. Funding for insurance fraud investigations and prosecutions - creation of fund. (Repealed) Source: L. 2010: Entire section added with relocations, (HB 10-1385), ch. 204, p. 882, § 1, effective May 5. L. 2012: Entire section repealed, (SB 12-110), ch. 158, p. 560, § 2, effective July 1. Editor's note: This section was similar to former § 10-3-207 (1)(e) as it existed prior to 2010. 10-3-208. Financial statements. (1) All insurance companies doing business in this state, unless otherwise provided in this title (except article 15) and article 14 of title 24, C.R.S., shall make and file with the commissioner annually, on or before the first day of March in each year, a statement under oath, upon a form to be prescribed by the commissioner, stating the amount of all premiums collected or contracted for in this state or from residents thereof, in cash or notes, by the company making such statement during the year ending the last day of December next preceding; the amounts actually paid policyholders on losses and the amounts paid policyholders as returned premiums by property and casualty insurance companies; the amount of insurance reinsured in other companies authorized to do business in this state and the amount of premiums paid therefor; the amount of insurance reinsured in companies, naming them, not authorized to do business in this state and the amount of premiums paid therefor; and Colorado Revised Statutes 2019 Page 130 of 943 Uncertified Printout the amount of reinsurance accepted from admitted companies and the premiums received from such reinsurance on residents of this state or risks located in this state, with the name of the companies so reinsured. The annual statement made to the commissioner pursuant to this section or other provisions of said references shall at least include the substance of that which is required by what is known as the convention blank form adopted from year to year by the national association of insurance commissioners, including any instructions, procedures, and guidelines not in conflict with any provision of this title for completing the convention blank form. (2) The commissioner may require any insurance company authorized to do business in this state to submit interim financial statements and reports on a monthly or quarterly basis in such form as he prescribes, as deemed necessary in the public interest. (3) Each domestic, foreign, and alien insurer that is authorized to transact the business of insurance in this state shall on or before March 1 of each year file with the national association of insurance commissioners a copy of its annual statement convention blank, along with such additional filings as prescribed by the commissioner for the preceding year. The information filed with the national association of insurance commissioners shall include the signed jurat page and the actuarial certification, if applicable. Any amendments and addendums to the annual statement filing subsequently made with the commissioner shall also be filed with the national association of insurance commissioners. (4) Foreign insurers that are domiciled in a state which has a law substantially similar to subsection (3) of this section shall be deemed in compliance with the provisions of said subsection (3). (5) In the absence of actual malice, members of the national association of insurance commissioners, their duly authorized committees, subcommittees, and task forces, their delegates, employees of the national association of insurance commissioners, and all others charged with the responsibility of collecting, reviewing, analyzing, and disseminating the information developed from the filing of the annual statement convention blanks shall be acting as agents of the commissioner under the authority of this section and shall not be subject to civil liability for libel, slander, or any other cause of action by virtue of their collection, review, and analysis or dissemination of the data and information collected from the required filings. (6) Examination synopses concerning insurance companies that are submitted to the division by the national association of insurance commissioners' insurance regulatory information system are confidential and shall not be disclosed by the division. (7) (a) In preparing the statements required by subsection (1) of this section, all insurance companies shall follow the instructions, procedures, and guidelines of the national association of insurance commissioners. If the initial application of any such instruction, procedure, or guideline would cause a reduction in the total capital and surplus of a domestic insurer of ten percent or more or would cause the capital and surplus of a domestic insurer to fall to or below the company action level as defined by the commissioner by rule, such insurer may, within thirty days after the effective date of such instruction, procedure, or guideline, file with the commissioner a request to phase in the effect of the instruction, procedure, or guideline over a period not to exceed three years or a time period approved by the commissioner. (b) Any request made pursuant to paragraph (a) of this subsection (7) shall include a complete analysis, in a form prescribed by the commissioner, of the impact upon the insurer making the request that is expected to result from application of the subject instruction, procedure, or guideline and, if a phase-in is requested, a description of the insurer's plan for the Colorado Revised Statutes 2019 Page 131 of 943 Uncertified Printout phase-in period. The commissioner shall not deny a request for a phase-in except upon notice and the opportunity for a hearing as provided in section 24-4-105, C.R.S. (c) Any request for a hearing made pursuant to paragraph (b) of this subsection (7) shall include a description of the basis on which relief is sought. Upon receiving such a request, the commissioner shall, with regard to the insurer making the request, postpone the effective date of the subject instruction, procedure, or guideline pending the conclusion of the hearing and the taking of final agency action thereon. The hearing shall commence within sixty days after the commissioner receives the request and shall be conducted in accordance with section 24-4-105, C.R.S. (8) Repealed. Source: L. 13: p. 331, § 15. C.L. § 2485. L. 23: p. 388, § 2. CSA: C. 87, § 13. L. 53: p. 363, § 1. CRS 53: § 72-1-13. C.R.S. 1963: § 72-1-13. L. 69: p. 503, § 1. L. 91: (1) and (2) amended, p. 1232, § 5, effective June 5; (3) to (6) added, p. 1246, § 7, effective July 1. L. 92: (1) amended, p. 1547, § 37, effective May 20. L. 97: (7) added, p. 91, § 1, effective March 24. L. 2004: (1) amended, p. 900, § 14, effective May 21. L. 2006: (8) added, p. 1429, § 1, effective August 7. L. 2011: (8) repealed, (HB 11-1033), ch. 93, p. 275, § 1, effective April 8. L. 2012: (1) amended, (HB 12-1266), ch. 280, p. 1504, § 27, effective July 1. Cross references: For reports generally, see § 10-3-109. 10-3-209. Tax on premiums collected - exemptions - penalties - repeal. (1) (a) All insurance companies writing business in this state, including, without limitation, those defined in section 10-1-102 (6), shall pay to the division of insurance a tax on the gross amount of all premiums collected or contracted for on policies or contracts of insurance covering property or risks in this state during the previous calendar year, after deducting from such gross amount the amount received as reinsurance premiums on business in this state, and the amount refunded under credit life and credit accident and health insurance policies on account of termination of insurance prior to the maturity date of the indebtedness, and, in the case of companies other than life, the amounts paid to policyholders as return premiums, which shall include dividends or unabsorbed premiums or premium deposits returned or credited to policyholders. (b) (I) The rate of tax shall be as follows: (A) For companies not exempted or charged a different rate of tax by another provision of this section, the rate of tax on the gross amount shall be: Premiums collected or contracted for during:Rate of tax: 19962.20% 19972.15% 19982.10% 19992.05% 2000 and thereafter2.00% (B) For companies maintaining a home office or a regional home office in this state, the rate of tax on the gross amount shall be one percent. Colorado Revised Statutes 2019 Page 132 of 943 Uncertified Printout (II) For purposes of this paragraph (b), any company is deemed to maintain a home office or regional home office in this state if such company either: (A) Substantially performs in this state the following functions, or substantially equivalent functions, for the company for each state in which the company is licensed, or for three or more of such states: Actuarial, medical, legal, approval or rejection of applications, issuance of policies, information and service, advertising and publications, public relations, hiring, testing, and training of sales and service forces; or (B) Maintains significant direct insurance operations in this state that are supported by functional operations which are both necessary for and pertinent to a line or lines of business written by the company in this state. (III) Any company desiring to qualify an office in this state as a home or regional home office shall make application for qualification to the commissioner on forms prescribed by the commissioner and shall submit proof that it is operating a home or a regional home office in this state. Applications for companies that were not approved in the immediate preceding year shall be received by the commissioner by December 31 of the year immediately preceding the year for which the application for qualification is being made. Applications for companies that were approved in the immediate preceding year shall be received by the commissioner by March 1 of the year for which qualification is being made. Applications for companies that were approved in the immediate preceding year received through March 31 shall pay a late charge of one hundred dollars per day for each day after March 1 that any such application is received by the commissioner. Applications received after March 31 shall be denied. The provisions of subsection (2) of this section shall not apply to companies maintaining a home office or regional home office in this state. (c) The taxes prescribed in paragraph (b) of this subsection (1) shall constitute all taxes collectible under the laws of this state against any such insurance companies, and no other occupation tax or other taxes shall be levied or collected from any insurance company by any county, city, or town within this state; but this title (except article 15) and article 14 of title 24, C.R.S., shall not be construed to prohibit the levy and collection of state, county, school, and municipal taxes upon the real and personal property of such companies, nor shall it include or prohibit the levy and collection of a tax to be paid on net workers' compensation premiums, as provided under the "Colorado Medical Disaster Insurance Fund Act", part 3 of article 46 of title 8, C.R.S. (d) (I) All fraternal and benevolent associations organized under the laws of this state and doing business in this state shall be exempt from the provisions of this section. (II) Mutual protective associations writing crop hail insurance only and operating on an advance premium basis shall be exempt from the taxes provided by this section on that portion of the premium designated to the loss fund. (III) There shall be no tax under this section in the case of any policy issued prior to 1959 by a domestic insurance company organized under the laws of this state, maintaining its principal place of business in this state, and having thirty percent or more of its assets invested in bonds or warrants of this state or of any county, city, town, or district of this state, and other property within this state in which such company is permitted by law to invest its funds, and the premium of which policy was fixed and is contractually binding upon the company. (IV) Except to the extent provided in subsection (2) of this section, the tax imposed by this section shall not apply to premiums collected or contracted for after December 31, 1968, on Colorado Revised Statutes 2019 Page 133 of 943 Uncertified Printout policies or contracts issued in connection with a pension, profit sharing, or annuity plan established by an employer for employees if contributions by such employer thereunder are deductible by such employer in determining such employer's net income as defined in section 39-22-304, C.R.S., and shall not apply to premiums collected or contracted for after December 31, 1968, on policies or contracts purchased for an employee by an employer if such employer is exempt under section 39-22-112, C.R.S., from the tax imposed by article 22 of title 39, C.R.S., or is a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Except to the extent provided in subsection (2) of this section, the tax imposed by this section shall not apply to annuity considerations collected or contracted for after December 31, 1976. (V) Repealed. (e) The taxes provided for in this section shall be due and payable on the first day of March in each year. Any company failing or refusing to render such statement and information, or to pay taxes as specified in this section, for more than thirty days after the time specified, shall be liable to a penalty of up to one hundred dollars for each additional day of delinquency, to be assessed by the commissioner. If the tax paid is less than the full amount prescribed by this section, interest at the rate of one percent per month or fraction thereof on the unpaid amount shall be charged from the date on which payment was due to the date on which full payment is made, and a penalty of up to twenty-five percent of the unpaid amount may be assessed by the commissioner. The commissioner may suspend the certificate of authority of a delinquent company until such taxes and penalty, should any penalty be imposed, are fully paid. (f) In computing assets for the purpose of this section, the investments of any such company in the bonds, notes, or other obligations of the United States of America, or any instrumentality of the United States, the obligations of which are guaranteed by the United States, and deferred or uncollected insurance premiums and annuity considerations shall first be deducted. Any company claiming entitlement to any reduced rate provided in this section shall present such evidence in justification of its claim as may be required by the commissioner. (g) For the purpose of obtaining the exemption provided in paragraph (d)(III) of this subsection (1), the term "other property within this state" means: Real estate and tangible personal property within this state; first mortgages upon real estate within this state; stocks or bonds of corporations organized under the laws of this state; deposits with banks, trust companies, savings and loan associations, building and loan associations, or financial institutions domiciled within this state; stocks or bonds of foreign or alien corporations which on the date of purchase of such stocks or bonds have fifty percent or more of their assets invested in this state; and accounts of agents who are residents of this state. (2) When, by the laws of any other state, any taxes and fees in the aggregate, fines, penalties, deposits of money or securities or other obligations, prohibitions, or requirements are imposed upon insurers organized under any law of this state and transacting business in such other state, or upon the agents of such insurer, greater in aggregate amount than those imposed upon similar insurers by the laws of this state, or when the laws of any other state require insurers of this state to deposit money or security for the benefit or protection of citizens of such other state, or when the laws or officers of any other state prohibit insurers of this state from transacting business therein without a special examination of the insurers or a computation of their liabilities by the officers of that state, the same taxes and fees in the aggregate, fines, penalties, deposits, examinations, obligations, and requirements may be imposed by the Colorado Revised Statutes 2019 Page 134 of 943 Uncertified Printout commissioner upon all insurers doing business in this state that are incorporated or organized under the laws of such other state and upon their agents. For the purpose of this section, an alien insurer may be deemed to be domiciled in a state designated by it wherein it has established its principal office or agency in the United States or maintains the largest amount of its assets. If no such office or agency is established, its domicile is the country under laws of which it is formed. (3) (a) Anything in subsection (1) of this section to the contrary notwithstanding, any insurance company doing business in this state which was liable for payment of more than five thousand dollars in taxes, as provided in this section, during the preceding calendar year shall, on and after January 1, 1971, pay quarterly estimates of such taxes as provided in paragraphs (b) to (d) of this subsection (3). (b) Such estimated taxes shall become due and payable on the last day of the month following the close of any calendar quarter of the year, except for the fourth quarter which shall be due March 1 and shall include adjustments for the preceding calendar year. Any company failing or refusing to pay such estimated taxes for more than thirty days after the time specified shall be liable to a penalty of up to one hundred dollars for each additional day of delinquency, to be assessed by the commissioner. Failure of a company to make quarterly payments, if required, each payment to be of at least one-fourth of either the total tax paid during the preceding calendar year or eighty percent of the actual quarterly tax for the current calendar year, whichever is greater, shall be considered and treated the same as a failure or refusal to pay the estimated taxes and shall subject the company to the penalties provided in this paragraph (b). The amount of estimated taxes and the penalties collected shall be paid to the division of insurance; and the commissioner may suspend the certificate of authority of such delinquent company until such estimated taxes and penalty, should any penalty be imposed, are fully paid. (c) Estimated taxes paid pursuant to this subsection (3) shall be based on the estimated amount of taxable premiums during the preceding calendar quarter. Except for the first calendar quarter of any year, calendar quarter estimates of taxes may include adjustments for any previous calendar quarter estimates of taxes, and estimated taxes shall be paid on the basis of such adjusted estimates. (d) Adjustments in payments of estimated taxes for any calendar year shall be made at the time of the filing of the annual statement required under section 10-3-208 and the payment of taxes required by this section. If a company claims a refund, it shall file for such refund at the time of filing such annual statement, and, if the commissioner claims a deficiency, he shall notify the deficient company thereof. (4) (a) The division of insurance shall transmit all taxes, penalties, and fines it collects under this section to the state treasurer for deposit in the general fund; except that the state treasurer shall deposit amounts in the specified cash funds as follows: (I) In the division of insurance cash fund created in section 10-1-103 (3), an amount that is equal to the general assembly's appropriation from the fund to the division for its direct and indirect expenditures less the total fee revenue that is deposited in the fund; except that the amount deposited in the fund under this subparagraph (I) shall not exceed five percent of all taxes collected under this section; (II) In the wildfire emergency response fund created in section 24-33.5-1226 and the wildfire preparedness fund created in section 24-33.5-1227, the amount of the taxes, penalties, and fines that the general assembly appropriates to each of the cash funds; and Colorado Revised Statutes 2019 Page 135 of 943 Uncertified Printout (III) (A) For the 2020-21 and 2021-22 state fiscal years, in the reinsurance program cash fund created in section 10-16-1107, an amount equal to the amount of premium taxes collected pursuant to this section in the 2020 calendar year that exceeds the amount of premium taxes collected pursuant to this section in the 2019 calendar year. (B) This subsection (4)(a)(III) is repealed, effective September 1, 2023. (b) Repealed. (5) For the purpose of auditing a company's tax statement, the commissioner or the commissioner's designee has the power to examine any books, papers, records, agreements, or memoranda bearing upon the matters required to be included in the tax statement. Such books, papers, records, agreements, or memoranda shall be made available upon request to the commissioner's office. Source: L. 13: p. 332, § 16. C.L. § 2486. L. 33: p. 636, § 1. CSA: C. 87, § 14. L. 41: p. 515, § 1. L. 53: p. 378, § 1. CRS 53: § 72-1-14. L. 55: p. 443, § 1. L. 59: p. 505, § 1. L. 60: p. 149, § 1. L. 61: p. 438, § 1. L. 63: p. 568, §§ 1, 2. C.R.S. 1963: § 72-1-14. L. 65: p. 755, § 1. L. 69: pp. 504-506, §§ 1-4, 1. L. 70: p. 243, § 1. L. 71: p. 694, § 1. L. 73: pp. 833, 834, §§ 1, 2. L. 75: (1)(c) amended, p. 310, § 55, effective September 1. L. 77: (1)(d)(IV) amended, p. 504, § 1, effective June 21. L. 81: (1)(d)(IV) and (3)(b) amended, p. 525, § 1, effective May 13. L. 86: (1)(d)(V) added, p. 549, § 2, effective July 1. L. 87: (1)(d)(IV) amended, p. 1451, § 27, effective June 22. L. 90: (1)(c) amended, p. 558, § 14, effective July 1. L. 92: (1)(b)(II), (1)(c), and (4) amended, p. 1548, § 38, effective May 20. L. 95: (1)(b)(I) amended, p. 490, § 4, effective May 16. L. 96: (1)(a) and (1)(b) amended, p. 551, § 1, effective April 24. L. 97: (5) added, p. 531, § 4, effective April 24. L. 2000: (1)(a) amended, p. 1616, § 2, effective August 2. L. 2003: (1)(a) amended, p. 616, § 9, effective July 1. L. 2004: (1)(c) amended, p. 900, § 15, effective May 21. L. 2012: (1)(c) amended, (HB 12-1266), ch. 280, p. 1505, § 28, effective July 1. L. 2013: (4) amended, (SB 13-270), ch. 250, p. 1316, § 5, effective May 23. L. 2014: (4)(a) amended, (HB 14-1195), ch. 117, p. 418, § 1, effective July 1. L. 2016: (1)(b) amended, (SB 16-165), ch. 278, p. 1145, § 1, effective January 1, 2017. L. 2019: (4)(a) amended, (HB 19-1168), ch. 204, p. 2187, § 2, effective May 17. Editor's note: (1) Subsection (1)(d)(V)(B) provided for the repeal of subsection (1)(d)(V), effective July 1, 1989. (See L. 86, p. 549.) (2) Subsection (4)(b)(II) provided for the repeal of subsection (4)(b), effective July 1, 2014. (See L. 2013, p. 1316.) Cross references: For required equality as to liabilities under subsection (1)(b) imposed by statute on domestic and foreign corporations, see article 115 of title 7; for legal effect, when discrimination exists, see American Smelting & Refining v. Colorado, 204 U.S. 103, 27 S. Ct. 198, 51 L. Ed. 393; for annual financial statements, see § 10-3-208. 10-3-210. Deposit and safekeeping of securities. (1) (a) The commissioner shall give receipts for all securities deposited with the commissioner, as required or permitted by law, to the company depositing them. (b) If the company depositing securities in accordance with paragraph (a) of this subsection (1) is adjudged insolvent, such deposit shall be released only upon the entry of an Colorado Revised Statutes 2019 Page 136 of 943 Uncertified Printout order of a court acting in accordance with the provisions of part 5 of this article. If a company that has not been adjudged insolvent elects to dissolve, the commissioner may release securities under joint control upon a showing by the insurance company satisfactory to the commissioner that all debts, obligations, and liabilities of the insurance company have been paid and discharged, or adequate provisions for payment and discharge have been made, and upon return of the company's certificate of authority to the commissioner. (c) (Deleted by amendment, L. 2004, p. 1061, § 8, effective July 1, 2004.) (d) If the company depositing securities in accordance with paragraph (a) of this subsection (1) remains solvent, the commissioner shall permit such company, or its assigns, to: (I) Collect and receive the interest and dividends on deposited securities; and (II) Withdraw any deposited securities if the company simultaneously deposits other securities to replace those withdrawn. (e) The provisions of this subsection (1) shall not apply to securities subject to part 12 of this article. (2) (a) (I) Notwithstanding any other provision of law, the securities qualified for deposit under this section may be deposited as provided in part 12 of this article with a clearing corporation or held in the federal reserve book-entry system. (II) Securities deposited with a clearing corporation or held in the federal reserve bookentry system and used to meet the deposit requirements set forth in this section shall be under the control of the commissioner and shall not be withdrawn by the company without the approval of the commissioner. (b) The commissioner may prescribe or approve reasonable arrangements and safeguards under which a solvent company may sell a particular deposited security if the company: (I) Immediately reinvests the proceeds of the sale in other securities eligible for deposit under this article; and (II) Deposits other securities to replace those securities that were sold. (c) Any owner, nominee owner, depository, or custodian of securities held in accordance with paragraph (a) of this subsection (2) shall not sell, claim against, or otherwise dispose of said securities without written permission of the commissioner. (d) Any company holding securities in accordance with paragraph (a) of this subsection (2) shall provide to the commissioner evidence issued by its custodian or member bank through which such company has deposited such securities in a clearing corporation or through which such securities are held in the federal reserve book-entry system, respectively, in order to establish that the securities are actually recorded in an account in the name of the custodian or other direct participant or member bank and that the records of the custodian, other participant, or member bank reflect that such securities are held subject to the order of the commissioner. (e) If the company depositing securities in accordance with paragraph (a) of this subsection (2) remains solvent, the commissioner shall permit such company, or its assigns, to: (I) Collect and receive the interest and dividends on those deposited securities; and (II) Withdraw any deposited securities if the company simultaneously deposits other securities to replace those withdrawn. (f) If the company depositing securities in accordance with paragraph (a) of this subsection (2) is adjudged insolvent, such deposit shall be released only upon the entry of an order of a court acting in accordance with the provisions of part 5 of this article. If a company that has not been adjudged insolvent elects to dissolve, the commissioner may release securities Colorado Revised Statutes 2019 Page 137 of 943 Uncertified Printout under joint control upon a showing satisfactory to the commissioner that all debts, obligations, and liabilities of the insurance company have been paid and discharged, or adequate provisions for payment and discharge have been made, and upon return of the company's certificate of authority to the commissioner. (g) (I) The commissioner may designate any solvent national bank, state bank, or trust company located in the city and county of Denver as the commissioner's depository for receiving and holding as custodian any deposit of securities in accordance with paragraph (a) of this subsection (2). (II) Any deposit received and held pursuant to this subsection (2) shall be received and held at the expense of the company. Source: L. 25: p. 313, § 3. CSA: C. 87, § 44. CRS 53: § 72-2-4. C.R.S. 1963: § 72-2-3. L. 83: Entire section amended, p. 450, § 1, effective May 3. L. 92: (1) amended, p. 1549, § 39, effective May 20. L. 96: Entire section amended, p. 97, § 1, effective July 1. L. 2004: (1)(a), (1)(b), (1)(c), and (2)(f) amended, p. 1061, § 8, effective July 1. Cross references: For requirement of deposit, see § 10-3-201; for certificate of deposit, see § 10-3-206. 10-3-211. Deposit only admitted assets. (1) Deposits made with the commissioner as permitted or required by law shall be only those admitted assets of the company that are securities eligible for the purpose of a deposit, as provided in section 10-3-235 (1) or (2). The company may deposit, withdraw, exchange, or substitute any security at any time if the total amount of securities remaining on deposit is no less than required by law. (2) When a domestic insurance company reinsures all of its business in another company, the securities deposited by the reinsured company with the commissioner, subject to any existing liens against and restrictions upon them, may be assigned or transferred to the reinsuring company, and the latter company shall thereupon acquire all the rights, title, and interest of the reinsured company in and to such securities and shall be entitled to all the rights, benefits, and privileges of the reinsured company pertaining thereto. If a domestic company, having securities on deposit with the commissioner, reinsures all of its business, such securities may only be withdrawn, except for the purpose of exchange or substitution, upon a showing satisfactory to the commissioner that all debts, obligations, and liabilities of the insurance company have been paid and discharged, or adequate provisions for payment and discharge have been made, and upon return of the company's certificate of authority to the commissioner. (3) (Deleted by amendment, L. 2004, p. 1062, § 9, effective July 1, 2004.) Source: L. 33: p. 611, § 1. CSA: C. 87, § 45. CRS 53: § 72-2-5. C.R.S. 1963: § 72-2-4. L. 69: p. 491, § 3. L. 2004: Entire section amended, p. 1062, § 9, effective July 1. 10-3-212. Insolvency or impairment of stock insurance company. A stock insurance company is deemed insolvent when its admitted assets are less than all of its liabilities, excluding from such liabilities the aggregate amount of its outstanding capital stock, and is deemed impaired when its admitted assets are less than its liabilities, including as a liability the Colorado Revised Statutes 2019 Page 138 of 943 Uncertified Printout aggregate amount of its outstanding capital stock, or when its surplus is less than the minimum requirements of section 10-3-201. Source: L. 25: p. 315, § 5. CSA: C. 87, § 46. CRS 53: § 72-2-6. C.R.S. 1963: § 72-2-5. L. 69: p. 544, § 2. 10-3-213. Investments eligible as admitted assets. (1) Domestic insurance companies may invest their funds in the categories of assets described in sections 10-3-215 to 10-3-230 and 10-3-242. Every such investment shall be an admitted asset of the company; except that, if the section describing a category of asset contains a quantitative limitation, an investment in that category of asset shall be an admitted asset under that section to the extent that it does not exceed such limitation. Any such limitation shall apply only with respect to the category of assets described in that section and shall not constitute a general prohibition and shall not be applicable to any other section. Except as provided in section 10-3-237, any investment, or part thereof, that does not qualify under any of said sections shall not be an admitted asset under the provisions of this part 2. Except as specifically provided in this title (except article 15) and article 14 of title 24, C.R.S., a domestic insurance company shall not be prohibited from acquiring or holding an asset that is not an admitted asset, and such company may lend, pledge, sell, transfer, assign, hypothecate, dispose of, or exchange any asset acquired by it. (2) Notwithstanding the provisions of subsection (1) of this section, an insurance company or other regulated entity to whom this section applies shall be required reasonably to diversify its investments made pursuant to sections 10-3-215 to 10-3-230 and 10-3-242 as to type and issue, and to maintain a sufficient degree of liquidity based on the nature of the business transacted. The commissioner may promulgate such reasonable rules and regulations as are necessary to carry out the provisions of this subsection (2), taking into consideration the standards of the national association of insurance commissioners. The commissioner may require an insurer or other regulated entity to show compliance by demonstrating that its investments are not overly concentrated in any one area, including without limitation the areas of duration, industry, issuer, or geographic location. Source: L. 69: p. 491, § 5. C.R.S. 1963: § 72-2-19. L. 85: Entire section amended, p. 380, § 2, effective May 1. L. 92: Entire section amended, p. 1767, § 3, effective March 20; entire section amended, p. 1549, § 40, effective May 20. L. 2004: (1) amended, p. 901, § 16, effective May 21. L. 2012: (1) amended, (HB 12-1266), ch. 280, p. 1505, § 29, effective July 1. Editor's note: Amendments to this section by Senate Bill 92-090 and House Bill 921090 were harmonized. 10-3-214. Quantitative investment limitations - manner of applying. In applying the investment limitations set forth in this part 2, which are expressed as percentages of a company's admitted assets, there shall be used as a base the total of all assets of the company that would be admitted under this title (except article 15) and article 14 of title 24, C.R.S., without regard to such limitations and without regard to any condition or restriction set forth in section 10-3-237 (2), and asset values will be those values determined at the current annual statement date or, in case of any statement or examination as of a date other than an annual statement date, those Colorado Revised Statutes 2019 Page 139 of 943 Uncertified Printout values determined at such other date. In applying any investment limitation set forth in this part 2, which is expressed as a percentage of a company's surplus, the amount of the company's surplus shall be that determined at the current annual statement date or, in the case of any statement or examination as of a date other than an annual statement date, the amount determined at such other date. Source: L. 69: p. 492, § 5. C.R.S. 1963: § 72-2-20. L. 92: Entire section amended, p. 1550, § 41, effective May 20. L. 2004: Entire section amended, p. 901, § 17, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1505, § 30, effective July 1. 10-3-215. Bonds and other evidences of indebtedness. (1) Domestic insurance companies may invest in lawfully issued interest-bearing bonds, including bonds which provide for imputed interest payable at maturity, revenue bonds, and debentures, and other evidences of indebtedness: (a) Of the United States or any agency or instrumentality thereof, or of any state, territory, district, or political subdivision of the United States; (b) Guaranteed or insured as to the payment of principal and interest by the United States or any agency or instrumentality thereof, or by any state, territory, district, or political subdivision of the United States; (c) Of counties, districts, townships, municipalities, and political subdivisions within the states, territories, and districts of the United States; except that investment in special improvement district obligations shall be limited to those which have received a designation or rating equivalent to or better than those specified in subsection (2)(b) of this section or, if not so designated or rated, have a credit enhancement approved by the commissioner; (d) Of the Dominion of Canada and provinces and districts thereof and of counties, districts, townships, municipalities, and political subdivisions thereof, or guaranteed or insured as to the payment of principal and interest by the dominion of Canada or by any province or district thereof; (e) Of solvent institutions created under the laws of the United States or of any state, territory, or district thereof, or of the dominion of Canada or any province thereof, which institutions are not referenced in paragraph (a), (b), (c), or (d) of this subsection (1) and which are not in default in the payment of interest on any of their bonds at the time the investment is made; but the aggregate value of all bonds and other evidences of indebtedness of any one such institution which may be admitted assets under this section shall not exceed three percent of the domestic insurance company's admitted assets, except as to those bonds and other evidences of indebtedness of insurance companies admitted to do business in any state of the United States or in the District of Columbia, for coinsurance or reinsurance purposes, in which case they shall not exceed the greater of three percent of the domestic insurance company's admitted assets or five percent of the debtor insurance company's admitted assets, or except as may be otherwise authorized under section 10-3-802; (f) Of farm credit banks and banks for cooperatives, or other similar corporations organized under the laws of the United States; (g) Repealed. (h) Issued by, or guaranteed or insured as to the payment of principal and interest by, any foreign government other than those listed in paragraph (d) of this subsection (1); except that Colorado Revised Statutes 2019 Page 140 of 943 Uncertified Printout the aggregate value of all such bonds and other evidences of indebtedness which may be admitted assets pursuant to this paragraph (h) and paragraph (i) of this subsection (1) shall not exceed twenty percent of the domestic insurance company's admitted assets, and except that the aggregate amount of foreign investments that may be admitted assets pursuant to this paragraph (h) and to paragraph (i) of this subsection (1) in a single foreign jurisdiction shall not exceed: (I) Ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating from a nationally recognized statistical rating organization recognized by the securities valuation office of the national association of insurance commissioners equivalent to securities valuation office rating 1 in the then current purposes and procedures manual of the securities valuation office; or (II) Three percent of its admitted assets as to any other foreign jurisdiction. (i) Of solvent foreign institutions other than those specified in paragraphs (e) and (j) of this subsection (1) which are not in default in the payment of interest on any of their bonds at the time the investment is made; except that the aggregate value of all such bonds and other evidences of indebtedness which may be admitted assets pursuant to this paragraph (i) and paragraph (h) of this subsection (1) shall not exceed twenty percent of the domestic insurance company's admitted assets, and except that the aggregate amount of foreign investments that may be admitted assets pursuant to this paragraph (i) and to paragraph (h) of this subsection (1) in a single foreign jurisdiction shall not exceed: (I) Ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating from a nationally recognized statistical rating organization recognized by the securities valuation office of the national association of insurance commissioners equivalent to securities valuation office rating 1 in the then current purposes and procedures manual of the securities valuation office; or (II) Three percent of its admitted assets as to any other foreign jurisdiction. (j) Issued by, or guaranteed or insured as to the payment of principal and interest by, the international bank for reconstruction and development, the inter-American development bank, the African development bank, or the Asian development bank; but the aggregate value of all bonds and other evidences of indebtedness which may be admitted assets pursuant to this paragraph (j) shall not exceed five percent of the domestic insurance company's admitted assets. (2) Domestic insurance companies may invest in mortgage-backed securities, including, without limitation, collateralized mortgage obligations and other obligations for the payment of money secured by participation certificates or loans secured, directly or indirectly, by real estate mortgages or deeds of trust if, at the time the investment is made, the entity issuing the obligation is not in default in the payment of interest on the obligation and: (a) The obligation or each participation certificate or loan is fully guaranteed or insured as to principal and interest by the United States or by any state, territory, or district thereof, or by any agency, instrumentality, or political subdivision of one or more of the foregoing; but the aggregate value of any one issue of such obligations which may be admitted assets pursuant to this paragraph (a) shall not exceed five percent of the domestic insurance company's admitted assets; or (b) The obligations have received a "1" or "2" quality designation by the securities valuation office of the national association of insurance commissioners as set forth in its most recently published valuations of securities manual or are rated investment grade in Standard & Poor's (at least BBB-) or Moody's (at least Baa3) bond guides, or have received comparable Colorado Revised Statutes 2019 Page 141 of 943 Uncertified Printout designations or ratings in the event the method of presenting such designations or ratings later changes or such designations or ratings are provided by successor entities, or have received comparable investment grade designations or ratings by any similar organization approved by the commissioner; but the aggregate value of any one issue of such obligations which may be admitted assets pursuant to this paragraph (b) shall not exceed three percent of the domestic insurance company's admitted assets. Source: L. 69: p. 492, § 5. C.R.S. 1963: § 72-2-21. L. 75: (1)(e) amended, p. 335, § 1, effective July 1. L. 81: (1)(e) amended and (1)(g) repealed, pp. 527, 531, §§ 2, 11, effective July 1. L. 86: IP(1) amended, p. 560, § 1, effective April 3. L. 91: (1) amended and (2) added, p. 1174, § 1, effective May 18. L. 92: (1)(e) and (1)(i) amended, p. 1767, § 4, effective March 20. L. 2000: (1)(h) and (1)(i) amended, p. 1729, § 2, effective August 15. 10-3-215.5. Investments in medium- and lower-grade obligations. (1) As used in this section, unless the context otherwise requires: (a) "Aggregate amount of medium-grade and lower-grade obligations" means the aggregate statutory statement value of medium-grade and lower-grade obligations. (a.3) "Domestic obligation" means an obligation described in section 10-3-215 (1)(a) to (1)(f). (a.7) "Foreign obligation" means an obligation described in section 10-3-215 (1)(h) and (1)(i). (b) "Lower-grade obligation" means an obligation rated four, five, or six by the securities valuation office of the national association of insurance commissioners or by any successor entity. (c) "Medium-grade obligation" means an obligation rated three by the securities valuation office of the national association of insurance commissioners or by any successor entity. (d) "Obligation" means a bond or other type of evidence of indebtedness referred to in section 10-3-215. (2) Without the written approval of the commissioner, no domestic insurance company shall acquire, directly or indirectly, any medium-grade or lower-grade obligation of any institution if, at the time of acquisition, after giving effect to any such acquisition: (a) The aggregate amount of all medium-grade and lower-grade domestic and foreign obligations then held by the domestic insurance company would exceed twenty percent of its admitted assets with the aggregate amount of such foreign obligations being no more than ten percent of its admitted assets; or (b) The aggregate amount of all lower-grade domestic and foreign obligations then held by the domestic insurance company would exceed ten percent of its admitted assets with the aggregate amount of such foreign obligations being no more than five percent of its admitted assets; or (c) The aggregate amount of all domestic and foreign obligations held by the domestic insurance company which were rated five or six by the securities valuation office of the national association of insurance commissioners or by any successor entity would exceed three percent of its admitted assets with the aggregate amount of such foreign obligations being no more than one and one-half percent of its admitted assets; or Colorado Revised Statutes 2019 Page 142 of 943 Uncertified Printout (d) The aggregate amount of all domestic and foreign obligations held by the domestic insurance company which were rated six by the securities valuation office of the national association of insurance commissioners or by any successor entity would exceed one percent of its admitted assets with the aggregate amount of such foreign obligations being no more than one-half percent of its admitted assets. (3) Attaining or exceeding the limit of any one of the categories listed in paragraphs (a) to (d) of subsection (2) of this section shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multi-category limits. (4) Without the written approval of the commissioner, no domestic insurance company shall acquire, directly or indirectly, any medium-grade or lower-grade obligation of any institution if, at the time of acquisition, after giving effect to any such acquisition: (a) The aggregate amount of all medium-grade and lower-grade obligations issued, guaranteed, or insured by such institution and held by the domestic insurance company exceeds one percent of the domestic insurance company's admitted assets; or (b) The aggregate amount of all lower-grade obligations issued, guaranteed, or insured by such institution and held by the domestic insurance company exceeds one-half of one percent of the domestic insurance company's admitted assets. (5) Nothing contained in this section shall prohibit a domestic insurance company from acquiring any obligation which it has committed to acquire if such insurance company would have been permitted to acquire that obligation pursuant to this section on the date on which such insurance company committed to purchase that obligation; and nothing in this section shall require a domestic insurance company to sell or otherwise dispose of any investment. (6) Notwithstanding any other provision of this section, a domestic insurance company may acquire, whether or not through a restructuring, an obligation of an institution in which such insurance company already has one or more obligations, if such obligation is acquired in order to protect an investment previously made in the obligations of such institution so long as all such acquired obligations of an institution do not exceed one-half of one percent of the insurer's admitted assets. (7) Nothing contained in this section shall prohibit a domestic insurance company from acquiring an obligation as a result of a restructuring of a medium- or lower-grade obligation already held. (8) The board of directors of any domestic insurance company which acquires or invests, directly or indirectly, more than two percent of its admitted assets in medium-grade and lowergrade obligations shall adopt a written plan for the acquisition of such investments. The plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain appropriate diversification standards applied to all of its investments, which may include, for example, standards for issuer, industry, duration, liquidity, and geographic location. (9) All obligations acquired by a domestic insurance company shall be rated in accordance with the standards of the securities valuation office or any successor entity. (10) The provisions of this section shall take effect July 1, 1992, and shall apply to all investments in obligations acquired on or after that date. Source: L. 92: Entire section added, p. 1768, § 5, effective July 1. L. 2000: (1)(a.3) and (1)(a.7) added and (2) amended, p. 1731, §§ 3, 4, effective August 15. Colorado Revised Statutes 2019 Page 143 of 943 Uncertified Printout 10-3-216. First liens on real property. (1) Domestic insurance companies may invest in loans secured by first liens on real property located in the United States or Canada, subject to the following provisions: (a) (I) At the time of acquisition, no such loan shall exceed: (A) Ninety percent of the value of the real property if the mortgage loan is secured by a purchase-money mortgage or like security received by the insurer upon disposition of the real property; (B) Eighty percent of the value of the real property if the mortgage loan is secured by commercial real property or by real property that is improved with a residential building designed for occupancy by five or more dwelling units and if the mortgage loan: Requires immediate scheduled payment in periodic installments of principal and interest; has an amortization period of thirty years or less; and requires periodic payments to be made no less frequently than annually. In addition, each periodic payment must be sufficient to assure that, at all times, the outstanding principal balance of the mortgage loan does not exceed the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate, and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this sub-subparagraph (B) are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. If the loan meets all other requirements of this sub-subparagraph (B), acceptable private mortgage insurance has been obtained, and the mortgage loan is secured by real property that is improved with a residential building, including a condominium, designed for occupancy by not more than four dwelling units, the loan may be up to ninety-seven percent of the value of the real property. (C) Seventy-five percent of the value of the real property if the mortgage loan is secured by a mortgage that does not meet the requirements set forth in sub-subparagraph (A) or (B) of this subparagraph (I). (II) In all cases, value shall be evidenced by the written appraisal of a qualified real estate appraiser, who may be an employee of the company; except that, in the case of property to be qualified under this section by reason of producing oil, gas, or other minerals, the appraisal must be made by an engineer or geologist qualified in the relevant field, and, in the case of commercial properties of over one hundred thousand dollars in value, the appraiser must be a member of an institute of real estate appraisers, or its equivalent. (b) Repealed. (c) The land to which the first lien pertains shall be improved with permanent buildings, or be used for agriculture or pasture, or be income-producing land, including, but not limited to, land used for parking lots or for the production of oil, gas, or other minerals; but loans secured by first liens on land not meeting any of the foregoing requirements of this paragraph (c) may be admitted assets of the company under this part 2 in an amount not exceeding in the aggregate five percent of its admitted assets. (d) Any improvements shall be insured against loss or damage by fire, for the benefit of the lending company, by some reliable fire insurance company for an amount not less than the unpaid balance of the obligation or the insurable value of the property, whichever is less. (e) The company shall hold such documents as are necessary to evidence its ownership of such first liens. If, under the law of the jurisdiction in which the real property is situated, it is Colorado Revised Statutes 2019 Page 144 of 943 Uncertified Printout necessary to the validity of the lien to record a mortgage or assignment thereof, the company shall record such mortgage or assignment in compliance with such law. (f) The entire obligation secured by a first lien on real estate shall be owned by the company; except that the company may own such an obligation in common with other participants if, at the time of the company's investment, each participant is: (I) A bank whose depositors are insured by the federal deposit insurance corporation; (II) A savings and loan association whose members are insured by the federal deposit insurance corporation or any successor agency thereto; (III) A trust for a pension or other benefit plan for employees qualified under section 401 of the federal "Internal Revenue Code of 1986", as amended; (IV) An insurance company organized in any state of the United States, the District of Columbia, or any province of Canada; or (V) A corporation or association owned wholly by one or more of the entities or one or more wholly owned subsidiaries of the entities specified in subparagraph (I), (II), or (IV) of this paragraph (f). (g) Repealed. (h) If before a loan is paid the value of the real property, including any improvements thereon, securing the loan depreciates, the loan may nevertheless be carried as an admitted asset, but not for an amount exceeding seventy-five percent of the current value of the real property. (i) The maximum amount of a loan or loans made, directly or indirectly, to any one obligor which may be an admitted asset of a company under this section shall not exceed two percent of such company's admitted assets. If, on April 5, 1973, a company has outstanding a loan to any one obligor which, except for the provisions of this paragraph (i) would be admitted assets under this section, or a binding commitment for any such loan, any such loan outstanding on such date shall continue to be admitted assets under this section, and any such loan made on or after April 5, 1973, pursuant to any such binding commitment shall be admitted assets under this section. (j) The aggregate amount of investments of a company which may be admitted assets under this section shall not exceed fifty percent of the company's admitted assets. If a company has outstanding investments which, in the aggregate, exceed fifty percent of the company's admitted assets on July 1, 1993, the company shall reduce the excess amount invested in first liens on real property at the rate of at least twenty percent of the July 1, 1993, excess each year for five years until the first liens on the real property portfolio do not exceed fifty percent of the company's admitted assets. If a fraternal benefit society has outstanding investments which, in the aggregate, exceed sixty percent of the society's admitted assets on July 1, 1993, the society shall reduce the excess amount invested in first liens on real property at the rate of at least twenty percent of the July 1, 1993, excess each year for five years until the first liens on the real property portfolio do not exceed sixty percent of the society's admitted assets. Thereafter, a fraternal benefit society shall, over a five-year period, further reduce its outstanding aggregate investments in first liens on real property to fifty percent of its admitted assets by twenty percent per year, unless an exemption is granted by the commissioner. Such exemption shall be based on an analysis of the financial condition of the fraternal society. Source: L. 69: p. 492, § 5. C.R.S. 1963: § 72-2-22. L. 71: p. 708, § 1. L. 73: pp. 839, 840, §§ 1, 2. L. 75: (1)(j) amended, p. 339, § 1, effective June 26; (1)(f) R&RE, p. 335, § 2, Colorado Revised Statutes 2019 Page 145 of 943 Uncertified Printout effective July 1. L. 81: (1)(a) amended, p. 532, § 1, effective April 1; (1)(f) and (1)(j) amended, p. 528, § 3, effective July 1. L. 93: (1)(f)(II) amended, p. 1772, § 25, effective June 6; (1)(i) and (1)(j) amended, p. 574, § 2, effective July 1. L. 2000: (1)(f)(III) amended, p. 1839, § 7, effective August 2. L. 2004: (1)(f)(II) amended, p. 148, § 51, effective July 1. L. 2014: IP(1), (1)(a), and (1)(e) amended and (1)(b) and (1)(g) repealed, (SB 14-209), ch. 396, p. 1995, § 1, effective August 6. 10-3-217. Federally guaranteed or insured real estate loans. Domestic insurance companies may invest in obligations for the payment of money secured by real estate mortgages or deeds of trust which are either guaranteed or insured by the United States, any state, territory, or district thereof, or by any agency, instrumentality, or political subdivision of one or more of the foregoing, if any such investment which is in excess of the value limitation set forth in section 10-3-216 (1)(a) is so insured or guaranteed. Source: L. 69: p. 494, § 5. C.R.S. 1963: § 72-2-23. 10-3-218. Real estate for use in company's business. Domestic insurance companies may invest in real estate for the accommodation of the company's business, but the aggregate investments by a company that may be admitted assets under this section shall not exceed fifteen percent of the company's admitted assets unless the commissioner has given prior approval of a greater aggregate investment. Any space in the company's home office building that is not required for its use may be rented to others. The commissioner may approve investments under this section which in the aggregate will not exceed twenty percent of the company's admitted assets, upon a finding that such investments do not render the company's operation hazardous, or its condition unsound, to the public or its policyholders. Source: L. 69: p. 494, § 5. C.R.S. 1963: § 72-2-24. L. 81: Entire section amended, p. 529, § 4, effective July 1. L. 2001: Entire section amended, p. 280, § 3, effective March 30. 10-3-219. Real estate acquired in satisfaction of indebtedness. (1) The following shall be admitted assets: (a) Such real estate as has been mortgaged to the company in good faith, by way of security for loans or for money due it; (b) Such real estate as is conveyed to the company in good faith in satisfaction of debts previously contracted in the course of its business; (c) Such real estate as is purchased at sales under execution issued on judgments and decrees based upon debts due, or at foreclosure sales under mortgages or deeds of trust owned or held by the company or obtained by redemption as junior judgment creditor or mortgagee. Source: L. 69: p. 494, § 5. C.R.S. 1963: § 72-2-25. 10-3-220. Real estate for production of income. (1) A domestic insurance company may invest in real estate for the production of income, subject to the following provisions: (a) The aggregate investments by a company which may be admitted assets under this section shall not exceed ten percent of the company's admitted assets. Colorado Revised Statutes 2019 Page 146 of 943 Uncertified Printout (b) The investment in any single parcel of real estate which may be an admitted asset under this section shall not exceed five percent of the company's admitted assets. (c) Real estate qualifying as an admitted asset under section 10-3-218 or 10-3-219 may, at the option of the company, be an admitted asset under this section if such real estate is otherwise eligible under the provisions of this section. (2) "Real estate", as used in this section, means lands held in fee simple or under leasehold estates, and improvements thereon or to be placed thereon, consisting only of store or other business buildings, or of dwellings, apartment houses, tenements, or other housing accommodations. Source: L. 69: p. 494, § 5. C.R.S. 1963: § 72-2-26. L. 2001: (2) amended, p. 281, § 4, effective March 30. 10-3-221. Tangible personal property for production of income. (Repealed) Source: L. 69: p. 494, § 5. C.R.S. 1963: § 72-2-27. L. 2001: (1) repealed, p. 281, § 5, effective March 30. 10-3-222. Policy loans. (Repealed) Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-28. L. 71: p. 709, § 1. L. 2001: Entire section repealed, p. 281, § 6, effective March 30. 10-3-223. Accounts in building or savings and loan associations. (Repealed) Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-29. L. 77: Entire section amended, p. 456, § 3, effective July 1. L. 2001: Entire section repealed, p. 281, § 7, effective March 30. 10-3-224. Time deposits. (Repealed) Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-30. L. 88: Entire section amended, p. 401, § 1, effective March 24. L. 2001: Entire section repealed, p. 282, § 8, effective March 30. 10-3-225. Transportation equipment interests. Domestic insurance companies may invest in equipment trust obligations or certificates which are adequately secured, or in other adequately secured instruments evidencing an interest in transportation equipment wholly or in part within the United States, and the right to receive determined portions of rental, purchase, or other fixed obligatory payments for the use or purchase of such transportation equipment; but the aggregate investments by a company which may be admitted assets under this section shall not exceed ten percent of the company's admitted assets, and the investment in the obligations or certificates of or in relation to any one transportation company, which may be admitted assets under this section, shall not exceed two percent of the investing company's admitted assets. Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-31. Colorado Revised Statutes 2019 Page 147 of 943 Uncertified Printout 10-3-226. Stocks. (1) Domestic insurance companies may invest in preferred and common stocks issued by any solvent corporation created under the laws of the United States or of any state of the United States, the District of Columbia, or of Canada or any province thereof, but the aggregate value of all such stocks which may be admitted assets under this section shall not exceed ten percent of the company's admitted assets. For the purpose of such limitation on aggregate value, a company may, if it so elects, determine the value of all its stocks which may be admitted assets under this section on the basis of the aggregate initial cost of the stocks in lieu of determining the value of all of such stocks as provided in section 10-3-214. (2) Notwithstanding the provisions of subsection (1) of this section, a domestic fire, casualty, or multiple-line insurance company may invest an additional twenty-five percent of its admitted assets in preferred and common stocks of any corporation organized under the laws of the United States, any state, territory, or possession of the United States, the District of Columbia, or the Dominion of Canada or any province thereof. (3) All investments authorized by subsections (1) and (2) of this section are subject to the following restrictions and limitations at the time of investment: (a) The corporation issuing such preferred stock shall meet the following qualifications: (I) If the class of preferred stock is cumulative preferred, the corporation must not be in arrears as to its dividends, or, if the class of preferred stock is noncumulative preferred, the corporation must have paid full dividends on that class of preferred stock in each of the last three years, or, if that class of noncumulative preferred stock has been outstanding less than three years, the commissioner of insurance must have approved the purchase thereof. (II) If there is a sinking fund for that class of preferred stock, the corporation's sinking fund payments shall be on a current basis. (III) (Deleted by amendment, L. 81, p. 529, § 5, effective July 1, 1981.) (b) The corporation issuing such common stock shall meet the following qualifications: (I) The corporation shall have had net earnings available for dividends on its outstanding common stock in each of the three fiscal years next preceding the date of acquisition. (II) The stock shall be registered on a national securities exchange or regularly traded on a national or regional basis. (III) (Deleted by amendment, L. 81, p. 529, § 5, effective July 1, 1981.) (c) If there is a rise in the market value of the aggregate stock investments of a domestic insurance company and if the current market value of the aggregate investments of such company in common and preferred stock exceeds fifty percent of the admitted assets of such company as valued on December 31 of any year, then such company shall, on or before March 1 of the following year, liquidate a portion of such investments so that the market value of such stock investments does not exceed fifty percent of the company's admitted assets. (d) Investments in common stock in any one corporation, at the time of investment, shall not exceed two percent of the admitted assets of the investing insurance company, and, at the time of investment, an insurance company shall not purchase more than five percent of the outstanding shares of common stock of any one corporation. (e) This section shall not apply to investments made pursuant to the provisions of section 10-3-802. Colorado Revised Statutes 2019 Page 148 of 943 Uncertified Printout Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-32. L. 71: p. 755, § 2. L. 73: pp. 842, 1408, §§ 1, 52, 53. L. 75: Entire section R&RE, p. 336, § 3, effective July 1. L. 81: (3)(a) and (3)(b) amended, p. 529, § 5, effective July 1. 10-3-227. Stock for purpose of reinsurance, consolidation, or merger. (1) Domestic insurance companies may invest in stock in any other insurance company authorized to do a similar business to that of the investing company, subject to the following provisions: (a) No greater amount shall be applied to the acquisition of such stock than the investing company's capital and surplus in excess of the minimum required by law; except that, the commissioner may, by written order prior to such acquisition, permit the application of a greater amount thereto. (b) A reinsurance, consolidation, or merger between the investing company and such other insurance company shall be effected within two years of the acquisition of such stock or within such extension of such period as may be granted by the commissioner. Source: L. 69: p. 496, § 5. C.R.S. 1963: § 72-2-34. 10-3-228. Collateral loans. (1) Domestic insurance companies may invest in collateral loans secured by the pledge of any one or more investments allowed for collateral loans, as provided by nationally recognized insurance statutory accounting principles, subject to the following provisions: (a) The collateral pledged shall be legally assignable and validly assigned to the lending company. (b) As at date made, no such loan shall exceed in amount seventy-five percent of the value of the collateral pledged. (c) At no time shall the admitted value of a collateral loan be in excess of the actual market value of the collateral pledged. (d) If any of the collateral pledged and taken into account to qualify a loan as an admitted asset under this section is of a category which, if invested in directly, would be subject to a limitation expressed as a percentage of the investing company's admitted assets, then, for the purpose of such limitation, so much of the loan as is so qualified by such collateral will be deemed to be a direct investment in such category. (e) No loan shall qualify as an admitted asset under this section unless limited to a term not exceeding five years or, if less, the maturity date, if any, of any of the collateral taken into account in qualifying the loan as an admitted asset under this section. Source: L. 69: p. 496, § 5. C.R.S. 1963: § 72-2-35. L. 2002: IP(1) amended, p. 1012, § 5, effective June 1. L. 2004: IP(1) amended, p. 1063, § 10, effective July 1. 10-3-228.5. Securities lending - repurchase - reverse repurchase - dollar roll transactions. (1) For the purposes of this section, unless the context otherwise requires: (a) "Dollar roll transaction" means two simultaneous transactions with settlement dates no more than ninety-six days apart so that in one transaction an insurer sells to a business entity and in the other transaction the insurer is obligated to purchase, from the same business entity, substantially similar securities of the following types: Colorado Revised Statutes 2019 Page 149 of 943 Uncertified Printout (I) Mortgage-backed securities issued, assumed, or guaranteed by the government national mortgage association, the federal national mortgage association, the federal home loan mortgage corporation, or their respective successors; and (II) Other mortgage-backed securities referred to in section 106 of Title I of the "Secondary Mortgage Market Enhancement Act of 1984", 15 U.S.C. sec. 77r-1, as amended. (b) "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period of time or upon demand. (c) "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or upon demand. (d) "Securities lending transaction" means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or upon demand. (2) An insurer may engage in securities lending, repurchase, reverse repurchase, and dollar roll transactions as set forth in this section. The insurer shall enter into a written agreement for securities lending, repurchase, reverse repurchase, and dollar roll transactions. Such agreements shall require that each transaction terminate no more than one year from its inception. (3) Cash received in a transaction under this section shall be invested in accordance with this article and in a manner that recognizes the liquidity needs of the transaction or is used by the insurer for its general corporate purposes. (4) So long as the transaction remains outstanding, the insurer, or its agent or custodian, shall maintain as acceptable collateral received in a transaction under this section, either physically or through the book entry systems of the federal reserve, depository trust company, participants' trust company, or other securities depositories approved by the commissioner, any of the following: (a) Possession of the acceptable collateral; (b) A perfected security interest in the acceptable collateral; or (c) In the case of a jurisdiction outside of the United States, title to, or rights of a secured creditor to, the acceptable collateral. (5) The limitations of section 10-3-215 (1)(e) and section 10-3-215.5 shall not apply to the business entity counter-party exposure created by transactions under this section. An insurer shall not enter into a transaction under this section, other than a dollar roll transaction, if, as a result of and after giving effect to the transaction: (a) The aggregate amount of securities then loaned, sold to, or purchased from any one business entity counter-party under this section would exceed five percent of its admitted assets; and in calculating the amount sold to or purchased from a business entity counter-party under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or (b) The aggregate amount of all securities then loaned, sold to, or purchased from all business entities under this section would exceed forty percent of its admitted assets. Colorado Revised Statutes 2019 Page 150 of 943 Uncertified Printout (6) The amount of collateral required for securities lending, repurchase, and reverse repurchase transactions is the amount required pursuant to the provisions of the purposes and procedures manual of the national association of insurance commissioners' securities valuation office or pursuant to a successor to such publication. Source: L. 2001: Entire section added, p. 282, § 9, effective March 30. 10-3-229. Investments for purposes of compliance in other jurisdictions. Admitted assets shall consist of such other securities and investments as may be necessary to comply with the laws or the departmental rules of other states or nations in which the company may do business. Source: L. 69: p. 497, § 5. C.R.S. 1963: § 72-2-36. 10-3-230. Additional investments. (1) Domestic insurance companies may invest in any additional investments, except items specifically defined as nonadmitted assets in this title (except article 15) and article 14 of title 24, C.R.S., without regard to any limitation, condition, restriction, or exclusion set forth in sections 10-3-215 to 10-3-229 and 10-3-242, and regardless of whether the same or a similar type of investment has been included in or omitted from any such section, subject to the following provisions: (a) The total amount of indebtedness secured by a lien on any single parcel of real property is an admitted asset only to the extent that such indebtedness does not exceed the value limitation set forth in section 10-3-216 (1)(a). (a.1) Notwithstanding the provisions of paragraph (a) of this subsection (1), indebtedness, subject to the provisions of section 10-3-216 (1)(h), is an admitted asset only to the extent that such indebtedness does not exceed ninety-five percent of the current value of the real property. The aggregate investment by a company which may be admitted assets under this paragraph (a.1) shall not exceed twenty percent of the limits allowable under paragraph (c) of this subsection (1). (b) The amount of indebtedness secured by a pledge of any collateral shall be an admitted asset only to the extent that such indebtedness does not exceed the value limitation set forth in section 10-3-228 (1)(b). (c) The aggregate investments by a company which may be admitted assets under this section shall not exceed the lesser of five percent of its admitted assets or fifty percent of the amount by which the sum of the par value of its outstanding capital stock, if any, and its surplus exceeds the sum of the minimum capital, if any, and the minimum surplus required of such company under the applicable provision of section 10-3-201. (d) In no event shall the admitted asset value of investments in loans secured by first liens on real property exceed the value limitations as set forth in section 10-3-216 (1)(i) and (1)(j). Source: L. 69: p. 497, § 5. C.R.S. 1963: § 72-2-37. L. 70: p. 120, § 17. L. 71: p. 710, § 1. L. 81: IP(1) amended, p. 530, § 6, effective July 1. L. 85: IP(1) amended, p. 380, § 3, effective May 1. L. 92: IP(1) amended, p. 1550, § 42, effective May 20. L. 93: (1)(a.1) and (1)(d) added, p. 573, § 1, effective July 1. L. 2002: IP(1) amended, p. 1012, § 6, effective June 1. Colorado Revised Statutes 2019 Page 151 of 943 Uncertified Printout L. 2004: IP(1) amended, p. 1063, § 11, effective July 1. L. 2012: IP(1) amended, (HB 12-1266), ch. 280, p. 1506, § 31, effective July 1. 10-3-231. Valuation of investments. (1) (a) Subject to the provisions of paragraphs (b), (c), and (d) of this subsection (1), all obligations having a fixed term and rate may, if not in default as to principal or interest, be valued as follows: If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made. (b) The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus brokerage charges paid in the acquisition of such obligations. (c) No such obligation shall be carried at above the call price for the entire issue during any period within which the obligation may be so called, and premiums paid at purchase shall be amortized by the scientific method to the first call date at which the entire issue may be redeemed. (d) Obligations subject to amortization under the published findings of the national association of insurance commissioners shall be carried at their amortized values. Obligations which do not qualify for amortization shall be reported at their market value or a book value based on an amortized computation, whichever is lower. (2) (a) Common stocks shall be valued at their market value, as determined by customary method, or, at the option of the company, they may be carried at cost if cost is less than market value. If no publicly traded market quotation is available, the value of the stocks shall be based on the pro rata share of the issuing company's net worth as shown by its audited financial statement or, in the case of an insurance company, the pro rata share of its statutory net worth. (b) Preferred stocks shall be valued in accordance with procedures promulgated annually by the valuations committee of the national association of insurance commissioners. (3) Other property purchased by a company may be valued at not more than its cost plus the cost of capitalized additions and permanent improvements, less depreciation. Depreciation shall be computed under the straight line method or, at the option of the company, under any other method resulting in larger accumulated depreciation at any given time. Depreciation of any buildings shall be based upon an estimated useful life of not more than fifty years. (4) Property acquired in satisfaction of a debt shall be valued at its fair market value or the amount of the debt, including capitalized taxes and expenses, whichever amount is less. (5) Property originally acquired in satisfaction of a debt and subsequently transferred to qualification under section 10-3-220 or 10-3-230 shall be valued as provided in subsection (3) of this section, and its cost shall be deemed to be its value at time of transfer determined under subsection (4) of this section. (6) To the extent investments are valued by the securities valuation office of the national association of insurance commissioners, all investments owned by domestic insurance companies shall be valued in accordance with the most recently published valuations of the securities valuation office. Other investments not valued by the securities valuation office shall be valued as otherwise is provided in this section, or, if not otherwise provided in this section, in accordance with procedures promulgated by the national association of insurance commissioners. Colorado Revised Statutes 2019 Page 152 of 943 Uncertified Printout Source: L. 69: p. 497, § 5. C.R.S. 1963: § 72-2-38. L. 71: p. 711, § 1. L. 81: (2)(a) amended, p. 530, § 7, effective July 1. L. 91: (6) added, p. 1247, § 8, effective July 1. 10-3-232. Liens for certain purposes permitted. For the purposes of section 10-3-216, the existence of any lien existing by law, for the payment of any bonds, indebtedness, or assessments of, or created by a levy of, any special improvement district, any tunnel district, any conservation district, any irrigation district, any other district or territory, any municipality or quasi-municipality, or any state in which any real estate is situated, or by the United States, shall not prevent mortgages, trust deeds, or other encumbrances upon such real estate, if otherwise first liens, from being admitted assets of domestic insurance companies, if the property securing such mortgage, deed of trust, or other encumbrance is not delinquent in the payment of any installment or interest upon any such bonds, indebtedness, or assessments at the time such real estate loan is made. Source: L. 69: p. 498, § 5. C.R.S. 1963: § 72-2-39. 10-3-233. Disposition of certain real estate. Any parcel of real estate qualifying as an admitted asset under section 10-3-218 or 10-3-219 at the time of its acquisition by the company and which has not been transferred to qualification as an admitted asset under any other section of this part 2 shall be sold within five years after such acquisition or within five years after its use for the accommodation of the company's business has entirely ceased, whichever is later, unless the company procures a certificate from the commissioner that the company's interests will suffer by such a sale, in which event the time may be extended as the commissioner shall direct in such certificate. Source: L. 69: p. 498, § 5. C.R.S. 1963: § 72-2-40. L. 81: Entire section amended, p. 530, § 8, effective July 1. 10-3-234. Approval and record of investments. (1) No investment, loan, or sale thereof shall, except as to loans on a life insurance company's policies or annuity and supplementary contracts, be made by any domestic insurance company: (a) Without the advance approval of its board of directors or of a committee appointed by such board and charged with the duty of making such investments, loans, or sales or of an officer charged with such duty; or (b) Unless the transaction is: (I) Transacted in compliance with a written policy or plan approved by its board of directors prior to the transaction; and (II) Ratified by such board or by a committee appointed by such board charged with the duty of reviewing such investments, loans, and sales at a meeting held not less than quarterly. (2) A permanent written record of all such investments, loans, and sales shall be maintained by the company. Source: L. 69: p. 498, § 5. C.R.S. 1963: § 72-2-41. L. 2000: Entire section amended, p. 445, § 1, effective August 2. Colorado Revised Statutes 2019 Page 153 of 943 Uncertified Printout 10-3-235. Certain admitted assets deemed securities for deposit purposes. (1) For purposes of the minimum capital or guaranty fund deposit required by section 10-3-201, the following admitted assets shall be deemed to be securities eligible for such deposit: Any asset qualified as an admitted asset under sections 10-3-215 to 10-3-217 and 10-3-225. (2) For purposes of optional reserve deposits permitted by section 10-7-101 (3) or other deposits permitted but not required by this title (except article 15) and article 14 of title 24, C.R.S., the following admitted assets, in addition to those referred to in subsection (1) of this section, shall be deemed to be securities eligible for such deposits: Any asset qualified as an admitted asset under section 10-3-220 or 10-3-226 to 10-3-228, and any life insurance policy, to the extent of the company's interest in the cash value thereof. (3) If a company deposits the stock of a wholly owned insurance subsidiary with the commissioner as an optional reserve deposit, the value of such stock for purposes of such deposit shall be reduced by the value of any cash or securities owned by the subsidiary and on deposit with the commissioner or with the duly authorized officer in any other jurisdiction as a deposit of the subsidiary required or permitted by law. (4) For purposes of all deposits required or permitted by this title (except article 15) and article 14 of title 24, C.R.S., assets shall be valued at their fair market value; except that, for purposes of optional reserve deposits permitted by section 10-7-101 (3), or other deposits permitted but not required by said references, bonds and mortgages shall be valued at their current book values under the methods used in determining admitted asset values for annual statement purposes. Source: L. 69: p. 499, § 5. C.R.S. 1963: § 72-2-42. L. 92: (2) and (4) amended, p. 1550, § 43, effective May 20. L. 2002: (1) and (2) amended, p. 1013, § 7, effective June 1. L. 2004: (2) and (4) amended, p. 901, § 18, effective May 21. L. 2012: (2) and (4) amended, (HB 121266), ch. 280, p. 1506, § 32, effective July 1. 10-3-236. Assets acquired through merger, consolidation, or reinsurance. Any investments acquired after May 31, 1969, through merger, consolidation, or reinsurance that are not admitted assets under this title (except article 15) and article 14 of title 24, C.R.S., shall not be deemed admitted assets by reason of their acquisition through merger, consolidation, or reinsurance. Source: L. 69: p. 499, § 5. C.R.S. 1963: § 72-2-43. L. 92: Entire section amended, p. 1551, § 44, effective May 20. L. 2004: Entire section amended, p. 902, § 19, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1506, § 33, effective July 1. 10-3-237. Assets acquired under prior law. (1) Notwithstanding any condition, restriction, or exclusion set forth in sections 10-3-215 to 10-3-229, any asset held by a company on May 31, 1969, which met the requirements of the law in effect immediately prior to such date for an investment of the company's reserves, paid-up capital stock, and other liabilities shall be an admitted asset of the company, but, if any such asset is in a category for which a limitation expressed in terms of a percentage of admitted assets is prescribed in section 10-3-216 (1)(c), 10-3-218, 10-3-220, 10-3-225, or 10-3-226, such asset shall be taken into account in determining Colorado Revised Statutes 2019 Page 154 of 943 Uncertified Printout whether any additional investment in such category made after May 31, 1969, may be an admitted asset under the section prescribing such limitation. (2) Notwithstanding any other provision of this title (except article 15) and article 14 of title 24, C.R.S., any asset held by a company on May 31, 1969, that is not an admitted asset under section 10-1-102 (2) or subsection (1) of this section and that did not meet the requirements of the law in effect immediately prior to such date for an investment of the company's reserves, paid-up capital stock, and other liabilities but which, under such law, would have been taken into account as an asset in determining the surplus of the company shall be taken into account as an admitted asset at all times at which the company has aggregate admitted assets under section 10-1-102 (2) and subsection (1) of this section in an amount at least equal to the total of its reserves, paid-up capital stock, and all other liabilities. (3) Notwithstanding any condition, restriction, or exclusion set forth in section 10-3-215 (1)(e), 10-3-216 (1)(f), or 10-3-226, any asset held prior to July 1, 1975, or thereafter acquired by exercise of warrants or other rights which were held prior to that date which met or would have met the requirements of the law in effect immediately prior to July 1, 1975, for an investment of the company's reserves, paid-up stock, and other liabilities shall be an admitted asset of the company; but, if any such asset is in a category for which a limitation expressed in terms of a percentage of admitted assets is prescribed in such sections, such asset shall be taken into account in determining whether any additional investment in such category made after July 1, 1975, may be an admitted asset under the section prescribing such limitation. (4) Notwithstanding any condition, restriction, or exclusion set forth in section 10-3-218, any asset held by a company on July 1, 1981, which met the requirements of the law in effect immediately prior to such date for an investment of the company qualified as an admitted asset under this part 2 shall remain an admitted asset; but such asset shall be taken into account in determining whether any additional investment made on or after July 1, 1981, may be an admitted asset under this part 2. Source: L. 69: p. 499, § 5. C.R.S. 1963: § 72-2-44. L. 75: (3) added, p. 337, § 4, effective July 1. L. 81: (4) added, p. 530, § 9, effective July 1. L. 92: (2) amended, p. 1551, § 45, effective May 20. L. 2002: (2) amended, p. 1013, § 8, effective June 1. L. 2003: (2) amended, p. 616, § 10, effective July 1. L. 2004: (2) amended, p. 1063, § 12, effective July 1. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1506, § 34, effective July 1. 10-3-238. Refunds. Whenever it appears to the satisfaction of the commissioner that, because of some mistake of fact, error in calculation, or erroneous interpretation of a statute of this or any other state, any insurer or other person engaged in the business of insurance in this state has paid to the commissioner or to the state of Colorado, pursuant to any provision of this title (except article 15) and article 14 of title 24, C.R.S., any taxes, fees, or other charges in excess of the amount legally chargeable against said insurer or other person during the one-year period immediately preceding the discovery of such overpayment, the commissioner has the authority to refund to such insurer or other person the amount of such excess by applying the amount thereof toward the payment of taxes, fees, or other charges already due, or that may thereafter become due, from such insurer or other person until such excess has been fully refunded; or, at the commissioner's discretion, the commissioner may make a cash refund thereof. Colorado Revised Statutes 2019 Page 155 of 943 Uncertified Printout Source: L. 71: p. 704, § 1. C.R.S. 1963: § 72-1-63. L. 92: Entire section amended, p. 1551, § 46, effective May 20. L. 2004: Entire section amended, p. 902, § 20, effective May 21. L. 2012: Entire section amended, (HB 12-1266), ch. 280, p. 1507, § 35, effective July 1. 10-3-239. Subordinated indebtedness. Domestic insurance companies may borrow and thereby assume a liability for the repayment of a sum of money upon a written agreement that the loan or advance with interest shall be repaid only out of surplus of the company in excess of such minimum surplus as is stipulated in and by the agreement. The agreement shall first be submitted to and approved by the commissioner. Repayment of principal or payment of interest may be made only with the approval of the commissioner when he is satisfied that the financial condition of the company warrants such action, but such approval may not be withheld if the company has and submits satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest clause of the agreement. No loan or advance made under the provisions of this section or interest accruing thereon shall form a part of the legal liabilities of the company until authorized for payment by the commissioner, but, until such authorization, all statements published by the company or filed with the commissioner shall show the amount thereof then remaining as a special surplus account. Nothing in this section shall be construed to mean that a company may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability. Source: L. 73: p. 837, § 1. C.R.S. 1963: § 72-1-66. Cross references: For financial statements that must be filed, see § 10-3-208. 10-3-240. Approval of investments. (1) Except for investments made pursuant to sections 10-3-802 and 10-7-402, no domestic insurance company may, directly or indirectly, invest more than two percent of the company's admitted assets in stocks, bonds, debentures, notes, or other securities of its affiliates, as defined in section 10-3-801, without the prior approval of the commissioner. This section shall apply only to investments made on or after July 1, 1975. (2) Notwithstanding the provisions of subsection (1) of this section, the commissioner may, upon written notice, require a domestic insurance company to obtain his prior approval for all investments in its affiliates if, based on past transactions of the insurance company, he determines that such investments might render the company's operation hazardous, or its condition unsound, to the public or its policyholders. (3) Any domestic insurance company proposing to make an investment subject to approval under subsection (1) or (2) of this section shall give written notice thereof to the commissioner. If the commissioner has not approved or disapproved such investment within thirty days after receipt of such notice, the investment shall be deemed approved at the end of such thirty-day period. Source: L. 75: Entire section added, p. 337, § 5, effective July 1. 10-3-241. Prohibited investments. (Repealed) Colorado Revised Statutes 2019 Page 156 of 943 Uncertified Printout Source: L. 81: Entire section added, p. 531, § 10, effective July 1. L. 83: Entire section amended, p. 453, § 1, effective April 21. L. 2001: Entire section repealed, p. 286, § 10, effective March 30. 10-3-242. Money market funds. (1) For the purposes of this section, "money market fund" means an open-end, diversified management type of mutual fund, registered under the federal "Investment Company Act of 1940", 15 U.S.C. 80a-1 et seq., as amended, objectives of which include the maintenance of a stable net asset value of a specified dollar amount per share and the shareholders of which may withdraw the value of their shares by check, telephone, or mail. Domestic insurance companies may invest in the shares of any one or more money market funds subject to the following limitations: (a) Domestic insurance companies may invest in money market funds that, at the time the investment is made, are either listed or meet the eligibility conditions for listing on the U.S. direct obligations exempt list, U.S. direct obligations/full faith and credit exempt list, or class 1 list, in the "purposes and procedures manual" of the securities valuation office of the national association of insurance commissioners. Investments in the shares of any one money market fund qualifying under this paragraph (a) shall not exceed ten percent of the domestic insurance company's total admitted assets. (b) Investments in shares of any one money market fund not qualified under paragraph (a) of this subsection (1) shall not exceed five percent of the domestic insurance company's total admitted assets. The aggregate value of all shares that may be admitted assets under this paragraph (b) shall not exceed ten percent of the domestic insurance company's total admitted assets. (c) At the time of an investment in a money market fund under this section, the aggregate value of a domestic insurer's investment in such money market fund shall not exceed five percent of the shares of such money market fund. (2) to (4) (Deleted by amendment, L. 2000, p. 1731, § 5, effective August 15, 2000.) Source: L. 85: Entire section added, p. 379, § 1, effective May 1. L. 96: (1) amended, p. 555, § 4, effective April 24. L. 2000: Entire section amended, p. 1731, § 5, effective August 15. 10-3-243. Derivative transactions - definitions - restrictions - rules. (1) For the purposes of this section, unless the context otherwise requires: (a) "Counter-party exposure amount" means: (I) The net amount of credit risk attributable to a derivative instrument entered into with a business entity other than through a qualified exchange or qualified foreign exchange, or cleared through a qualified clearinghouse as an over-the-counter derivative instrument. The net amount of credit risk shall equal: (A) The market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or (B) Zero if the liquidation of the derivative instrument would not result in a final cash payment to the insurer. (II) If over-the-counter derivative instruments are entered into under a written master agreement that provides for netting of payments owed by the respective parties, and the domiciliary jurisdiction of the counter-party is either within the United States or within a foreign Colorado Revised Statutes 2019 Page 157 of 943 Uncertified Printout jurisdiction listed in the purposes and procedures manual of the national association of insurance commissioners' securities valuation office as eligible for netting, the net amount of credit risk shall be the greater of zero or the net sum of: (A) The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurer; and (B) The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity. (III) For open transactions, market value shall be determined at the end of the most recent quarter of the insurer's fiscal year and shall be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties. (b) (I) "Derivative instrument" means an agreement, option, instrument, or a series or combination thereof: (A) To make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests or to make a cash settlement in lieu thereof; or (B) That has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one or more underlying interests. (II) (A) "Derivative instrument" includes options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures, and any other agreements, options, or investments that are substantially similar and any agreements, options, and instruments permitted under rules adopted by the commissioner. (B) "Derivative instrument" does not include investments that are otherwise permitted pursuant to this article, nor does "derivative instrument" include repurchase, reverse repurchase, dollar roll, securities lending, or similar transactions. (c) "Hedging transaction" means a derivative transaction that is entered into and maintained to reduce or manage: (I) The risk of a change in value, yield, price, cash flow, or quantity of assets or liabilities that an insurer has acquired or incurred or anticipates acquiring or incurring; or (II) The currency exchange rate risk or the degree of exposure as to assets or liabilities that an insurer has acquired or incurred or anticipates acquiring or incurring. (d) "Income generation" means a derivative transaction involving the writing of covered call options, covered put options, covered caps, or covered floors that is intended to generate income or enhance return. (e) "Replication transaction" means a derivative transaction or combination of derivative transactions that is intended to replicate the investment in one or more assets that an insurer is authorized to acquire or sell under this title. A derivative transaction that is entered into as a hedging transaction shall not be considered a replication transaction. (2) A domestic insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions under this section by: (a) Using derivative instruments to engage in hedging transactions if, as a result of and after giving effect to the transactions: (I) The aggregate statement value of options, caps, floors, and warrants not attached to another financial instrument purchased and used in hedging transactions does not exceed seven and one-half percent of its admitted assets; Colorado Revised Statutes 2019 Page 158 of 943 Uncertified Printout (II) The aggregate statement value of options, caps, and floors written in hedging transactions does not exceed three percent of its admitted assets; and (III) The aggregate potential exposure of collars, swaps, forwards, and futures used in hedging transactions does not exceed six and one-half percent of its admitted assets; (b) Entering into the following types of income generation transactions if, as a result of and after giving effect to the transactions, the aggregate statement value of the fixed income or equity assets that are subject to call or that generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying derivative instruments subject to call, plus the amount of the purchase obligations under the puts, does not exceed ten percent of its admitted assets: (I) Sales of covered call options on noncallable fixed income securities, callable fixed income securities if the option expires by its terms prior to the end of the noncallable period, or derivative instruments based on fixed income securities; (II) Sales of covered call options on equity securities, if the insurer holds in its portfolio, or is able to immediately acquire through the exercise of options, warrants, or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold; (III) Sales of covered puts on investments that the insurer is permitted to acquire under this section, if the insurer has placed into escrow, or entered into a custodial agreement segregating, cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold; or (IV) Sales of covered caps or floors, if the insurer holds in its portfolio the investments generating the cash flow to make the required payments under the caps or floors during the complete term that the cap or floor is outstanding. (c) An insurer may use derivative instruments for replication transactions if any asset being replicated is subject to all the provisions and limitations on the making thereof specified in this title with respect to investments by the insurer as if the transaction constituted a direct investment by the insurer in the replicated asset. (d) An insurer shall include all counter-party exposure amounts in determining compliance with general diversification requirements and medium- and low-grade investment limitations under this section. (e) Any investments in derivative investments shall be made in accordance with a written derivative use plan approved by the company's board of directors. The derivative use plan must be available for review by the commissioner upon request. An insurer must be able to demonstrate to the commissioner the intended hedging characteristics and ongoing effectiveness of the derivative transactions through cash flow testing or other appropriate analysis. (f) The commissioner may approve additional transactions involving the use of derivative instruments in excess of the limits in this section. (3) Notwithstanding any provision of this section to the contrary, domestic insurers are prohibited from establishing margin accounts without the prior approval of the commissioner; except that the commissioner shall approve reasonable plans for domestic insurance companies to use financial futures or short selling techniques for hedging purposes. (4) The commissioner may promulgate rules as necessary to implement this section. Colorado Revised Statutes 2019 Page 159 of 943 Uncertified Printout Source: L. 2001: Entire section added, p. 283, § 9, effective March 30. L. 2014: (1)(b)(II)(A), (1)(d), (2)(a), and (2)(e) amended and (4) added, (SB 14-152), ch. 312, p. 1317, § 1, effective July 1. L. 2015: (4) amended, (SB 15-264), ch. 259, p. 944, § 13, effective August 5. Editor's note: Subsection (4) was numbered as (3) in SB 14-152 but has been renumbered on revision for ease of location. PART 3 UNIFORM GUARANTY DEPOSITS 10-3-301. Definitions. As used in this part 3, unless the context otherwise requires: (1) "Alien insurer" means any insurer incorporated or organized under the laws of any country other than the United States. (2) "Domestic insurer" means any insurer incorporated or organized under the laws of this state. (3) "Foreign insurer" means any insurer incorporated or organized under the laws of any state, as defined in this section, other than this state. (4) "Insurer" means any insurance company except a life insurance company and includes any reciprocal or interinsurance exchange. (5) "Policyholders" means claimants under the insurer's policies, claimants having claims which arise under or by reason of the insurer's policies, and obligees under its surety contracts. (6) "State" means any state of the United States, the Commonwealth of Puerto Rico, and the District of Columbia. (7) "United States" means the states of the United States, the Commonwealth of Puerto Rico, and the District of Columbia. Source: L. 53: p. 360, § 1. CRS 53: § 72-16-1. C.R.S. 1963: § 72-15-1. 10-3-302. Deposits required - when. No foreign or alien insurer authorized to transact business in this state, except a life insurance company, shall do such business unless it deposits and continuously maintains with the commissioner, or with an official of some other state of the United States designated by law to accept such deposit, cash, or securities having a fair market value of not less than the amounts required to be deposited for such insurers by the statutes of the state of Colorado. Such deposit shall be held for the benefit and protection of all the policyholders of such insurer in the United States. If the deposit is made with an official of some other state, the commissioner shall be furnished with and shall accept as evidence of deposit the certificate of such state officer under his hand and seal certifying that he holds such deposit for the benefit and protection of all the policyholders of such insurer in the United States. The provisions of this part 3 excepting life insurance companies from its stipulations shall not in any manner affect the duty and obligation of such companies to comply with the requirements of section 10-3-201, concerning cash capital, guaranty fund deposits, and surplus, and all such life insurance companies shall strictly comply therewith. Colorado Revised Statutes 2019 Page 160 of 943 Uncertified Printout Source: L. 53: p. 361, § 2. CRS 53: § 72-16-2. L. 57: p. 466, § 1. C.R.S. 1963: § 72-152. L. 69: p. 500, § 7. 10-3-303. Deposits with commissioner. In the event any domestic insurer or alien insurer using this state as a state of entry into the United States is required, pursuant to the laws of any other state, country, province, district, or territory, to make a deposit differing in amount or character from the deposit required of domestic insurers by the laws of this state, such insurer may deposit with the commissioner cash or securities of the kind and amount sufficient to enable the insurer to meet such requirement, and the commissioner shall issue a certificate as evidence of such deposit for filing with an official of such other state, country, province, district, or territory. Source: L. 53: p. 361, § 3. CRS 53: § 72-16-3. C.R.S. 1963: § 72-15-3. Cross references: For the deposit and safekeeping of deposits generally, see § 10-3-210. 10-3-304. Depositaries - responsibility. Upon request of the insurer, the commissioner may designate any solvent trust company or other solvent financial institution having trust powers domiciled in this state as the commissioner's depositary to receive and hold any such deposit. Any such deposit so held shall be at the expense of the insurer. The state of Colorado shall be responsible for the safekeeping and return of all funds and securities deposited pursuant to this part 3 with the commissioner or in any such depositary so designated by him. Source: L. 53: p. 361, § 4. CRS 53: § 72-16-4. C.R.S. 1963: § 72-15-4. Cross references: For the deposit and safekeeping of deposits generally, see § 10-3-210. 10-3-305. Rights of depositors. (1) So long as the insurer remains solvent and complies with this part 3, it may: (a) Demand, receive, sue for, and recover the income from securities or cash deposited in accordance with this part 3; (b) Exchange and substitute for the deposited cash or securities, or any part thereof, cash or eligible securities of equivalent or greater value; and (c) Inspect, at reasonable times, any deposit made in accordance with this part 3. Source: L. 53: p. 362, § 5. CRS 53: § 72-16-5. C.R.S. 1963: § 72-15-5. 10-3-306. Release of deposits. (1) Any deposit made in this state under this part 3 shall be released and returned: (a) To the insurer upon extinguishment by reinsurance or otherwise of all liability of the insurer for the security of which the deposit is held; or (b) To the insurer to the extent such deposit is in excess of the amount required; or (c) Upon proper order of a court of competent jurisdiction to the receiver, conservator, rehabilitator, liquidator of the insurer, or any other properly designated official who succeeds to the management and control of the insurer's assets. Colorado Revised Statutes 2019 Page 161 of 943 Uncertified Printout Source: L. 53: p. 362, § 6. CRS 53: § 72-16-6. C.R.S. 1963: § 72-15-6. 10-3-307. Commissioner order release. No such release shall be made except upon application to and the written order of the commissioner. The commissioner shall have no personal liability for any such release of any such deposit or part thereof so made by him in good faith. Source: L. 53: p. 362, § 7. CRS 53: § 72-16-7. C.R.S. 1963: § 72-15-7. PART 4 DELINQUENCIES 10-3-401. Legislative declaration. (1) The purpose of this part 4 is to make available to the commissioner supplemental remedial authority in instances of insurance company delinquencies of various kinds and degrees which demand regulation and control by the commissioner in order to effectuate his responsibility that the business of insurance in this state is conducted according to law and his responsibility to protect the policyholders and public of this state. Most delinquencies are of such a kind or degree as to not justify the imposing of the remedy or sanction of loss of certificate or of rehabilitation or liquidation by court order. Either of the remedies of loss of certificate or of rehabilitation or liquidation by court order would in many instances defeat any realistic opportunity to rehabilitate the delinquent company. Such remedies are likely to destroy or diminish one or more of the following values or assets: The value of the insurance account or in-force business of the insurer; the value of the insurer as a going concern; the value of its agency force; and the value of other of its assets. (2) The remedial steps provided by this part 4 are provided with the purpose in mind that insurance companies committing or suffering a delinquency be rehabilitated where and whenever possible with no loss of public confidence in the companies, and thus avoid the loss of a certificate of or the institution of rehabilitation or liquidation proceedings, by court order, against any insurance company, where possible. Furthermore, the remedial steps provided in this part 4 are provided to protect the assets of an insurer pending determination of whether or not the insurer can be successfully rehabilitated. In instances where rehabilitation or liquidation by court order are inevitable, it is nevertheless the purpose of this part 4 to allow preliminary or emergency supervision to prevent a dissipation of assets from taking place, and thus benefit the policyholders of the company. In such an instance, this part 4 shall operate in conjunction with part 5 of this article. Source: L. 69: p. 544, § 3. C.R.S. 1963: § 72-29-1. L. 92: Entire section amended, p. 1424, § 5, effective July 1. 10-3-402. Definitions. All terms defined in section 10-1-102 shall have the same meaning in this part 4. As used in this part 4, unless the context otherwise requires: (1) (Deleted by amendment, L. 92, p. 1425, § 6, effective July 1, 1992.) (2) "Delinquency" means any act, omission, or condition, or combination thereof, which is contrary to the applicable laws of this state or any other state, including any regulation Colorado Revised Statutes 2019 Page 162 of 943 Uncertified Printout lawfully promulgated by the commissioner of insurance of any state or any other person or state agency having supervision of the business of insurance. It includes, but is not limited to, any such act, omission, or condition, or combination thereof, committed or created by or under the direction or authority of any insurance company or any officer or representative thereof. Specifically, it includes any act, omission, or condition, or combination thereof, which, although not otherwise proscribed by law, nevertheless renders the operation of the insurance company hazardous to the public or its policyholders. (3) "Direct supervision" means the institution of control of an insurance company by order of the commissioner whereby one or more specifically enumerated acts shall be required of the company by order of the commissioner, or one or more specifically enumerated acts or decisions of the company shall not be permitted without prior written approval of the commissioner. In addition, such term includes the power to take all steps necessary to preserve, protect, and recover an insurance company's assets as set forth in section 10-3-405 (2). It is a condition of control beyond normal regulation by the division of insurance and beyond the notifying of an insurance company of a determination of delinquency by the commissioner and supplying the company a list of requirements to abate the condition. (4) "Rehabilitation" or "to rehabilitate" refers to the removal of an existing delinquency and restoration of the company to a condition of compliance with the law. Source: L. 69: p. 545, § 3. C.R.S. 1963: § 72-29-3. L. 92: Entire section amended, p. 1425, § 6, effective July 1. 10-3-403. Scope of part 4. In addition to, and not to the exclusion of, any remedies or powers otherwise available to him, the commissioner may elect to take action against any insurance company formed or incorporated under the laws of this state or doing business in this state, whether authorized or not, which commits or suffers a delinquency according to the provisions of this part 4. Source: L. 69: p. 545, § 3. C.R.S. 1963: § 72-29-2. 10-3-404. Determination of delinquency - procedure. Whenever evidence exists to the satisfaction of the commissioner that an insurance company has committed or suffered a delinquency, the commissioner may, upon determination of delinquency, notify the insurance company of his determination and furnish the insurance company a written list of requirements to abate his determination, and, if deemed necessary by the commissioner, he may place the insurance company under his direct supervision, with written notice to the company that it is so placed under direct supervision. Source: L. 69: p. 545, § 3. C.R.S. 1963: § 72-29-4. 10-3-405. Direct supervision. (1) Any insurance company placed under direct supervision shall remain under direct supervision until all delinquencies are remedied, or until the commissioner deems such direct supervision no longer is necessary or desirable. During the period of direct supervision, the commissioner may appoint a supervisor other than himself to Colorado Revised Statutes 2019 Page 163 of 943 Uncertified Printout supervise the company and may provide that the company may not take any of the following actions without prior approval in writing of the commissioner or his duly appointed supervisor: (a) Dispose of, convey, or encumber any of its assets or its business in force; (b) Withdraw any of its bank accounts; (c) Lend any of its funds; (d) Invest any of its property; (e) Transfer any of its property; (f) Incur any debt, obligation, or liability; (g) Merge or consolidate with another company; (h) Enter into any new reinsurance contract or treaty. (2) In addition to the power to require prior written approval of any of the actions set forth in subsection (1) of this section, the commissioner or the commissioner's duly appointed supervisor may take any further steps necessary to preserve, protect, and recover any assets or property of an insurance company under direct supervision. Source: L. 69: p. 546, § 3. C.R.S. 1963: § 72-29-5. L. 92: Entire section amended, p. 1425, § 7, effective July 1. 10-3-406. Protest of finding of delinquency. In the event the insurance company protests the determination of delinquency by the commissioner, the commissioner shall stay his decision to place the insurance company under direct supervision and shall give the insurance company not less than fifteen days to show cause, at a hearing conducted by the commissioner, why such a determination should not be made. In cases of emergency, the commissioner may allow his determination of delinquency to stand until the insurance company, under the show cause order or at the hearing, gives sufficient proof that the commissioner's determination was erroneous. Source: L. 69: p. 546, § 3. C.R.S. 1963: § 72-29-6. 10-3-407. Costs of direct supervision. All costs incident to the services of direct supervision shall be determined by the commissioner, and all reasonable costs so determined shall be a charge against the assets and funds of the insurance company so directly supervised. Source: L. 69: p. 546, § 3. C.R.S. 1963: § 72-29-7. 10-3-408. Conservatorship. (Repealed) Source: L. 69: p. 546, § 3. C.R.S. 1963: § 72-29-8. L. 92: Entire section repealed, p. 1426, § 8, effective July 1. 10-3-409. Protest of order of conservatorship. (Repealed) Source: L. 69: p. 547, § 3. C.R.S. 1963: § 72-29-9. L. 92: Entire section repealed, p. 1427, § 9, effective July 1. Colorado Revised Statutes 2019 Page 164 of 943 Uncertified Printout 10-3-410. Costs of conservatorship. (Repealed) Source: L. 69: p. 547, § 3. C.R.S. 1963: § 72-29-10. L. 92: Entire section repealed, p. 1427, § 10, effective July 1. 10-3-411. Penalties for noncompliance. Any insurance company or any officer or official thereof who willfully fails to comply with an order of the commissioner while such insurance company is under direct supervision of the commissioner is guilty of a misdemeanor and, upon conviction thereof, shall be punished by imprisonment in the county jail for not more than two years, or by a fine of not more than five thousand dollars, or by both such fine and imprisonment. Source: L. 69: p. 547, § 3. C.R.S. 1963: § 72-29-11. L. 92: Entire section amended, p. 1427, § 11, effective July 1. 10-3-412. Review of action while under direct supervision. At any time during the period of direct supervision, or at any time pending abatement of the commissioner's determination of delinquency, the insurance company may request the commissioner, or his duly appointed deputy, to review an action taken or proposed to be taken by the direct supervisor, specifying in what manner the action complained of is believed not to be in the best interests of the insurance company. The insurance company shall be entitled to a hearing on such a request, if desired by the company. Source: L. 69: p. 547, § 3. C.R.S. 1963: § 72-29-12. L. 92: Entire section amended, p. 1427, § 12, effective July 1. 10-3-413. Appeal from final determination or order of commissioner. (1) Upon exhausting all means of administrative appeal provided in this part 4, or in case the commissioner, under section 10-3-406, refuses to stay his order or determination pending the show cause order and hearing, the insurance company aggrieved by such determination or order may avail itself of the following procedure of appeal and none other: (a) The insurance company shall file a petition setting forth its particular objection to the order or determination in the district court in and for the city and county of Denver, and not elsewhere, against the commissioner as defendant. Said action shall have precedence over all other cases on the docket of a different nature. The action shall not be limited to questions of law but shall be tried and determined upon a trial de novo. (b) Either party to said action may appeal to the appellate court having jurisdiction of said cause of action, and said appeal shall have precedence in the appellate court over all causes of action of a different character pending in the appellate court. (2) The commissioner is not required to give any appeal bond in any cause arising under this section. Source: L. 69: p. 547, § 3. C.R.S. 1963: § 72-29-13. L. 92: IP(1) amended, p. 1428, § 13, effective July 1. Colorado Revised Statutes 2019 Page 165 of 943 Uncertified Printout 10-3-414. Nondisclosure of reports and evidence during period of direct supervision or conservatorship. Any other provision of law notwithstanding, the commissioner shall not divulge to the public any examination report, results of investigation, or other information received by the division of insurance on, about, or relating to any insurance company which would be detrimental to the efforts of rehabilitation of that company under this part 4. Source: L. 69: p. 548, § 3. C.R.S. 1963: § 72-29-14. Cross references: For the publication of reports and statements, see § 10-3-109. PART 5 INSURERS' REHABILITATION AND LIQUIDATION Editor's note: This part 5 was numbered as article 17 of chapter 72, C.R.S. 1963. The substantive provisions of this part 5 were repealed and reenacted in 1992, resulting in the addition, relocation, and elimination of sections as well as subject matter. For amendments to this part 5 prior to 1992, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume. Former C.R.S. section numbers are shown in editor's notes following those sections that were relocated. 10-3-501. Legislative declaration - intents and purposes. (1) This part 5 shall not be interpreted to limit the powers granted the commissioner by other provisions of law. (2) This part 5 shall be liberally construed to effect the purpose stated in subsection (3) of this section. (3) The purpose of this part 5 is to protect the interests of insureds, claimants, creditors, and the public generally, with minimum interference with the normal prerogatives of the owners and managers of insurers, through: (a) Early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures; (b) Improved methods for rehabilitating insurers, involving the cooperation and management expertise of the insurance industry; (c) Enhanced efficiency and economy of liquidation, through clarification of the law, to minimize legal uncertainty and litigation; (d) Equitable apportionment of any unavoidable loss; (e) Lessening the problems of interstate rehabilitation and liquidation of insurers by facilitating cooperation between states in the liquidation process and by extending the scope of personal jurisdiction over debtors of insurers outside this state; (f) Regulation of the insurance business by means of laws relating to delinquency procedures and substantive rules relating to the insurance business generally; and (g) The provision of a comprehensive scheme for the rehabilitation and liquidation of insurance companies and those subject to this part 5 as part of the regulation of the business of insurance, the insurance industry, and insurers in this state. Colorado Revised Statutes 2019 Page 166 of 943 Uncertified Printout (4) The general assembly finds, determines, and declares that proceedings in cases of insurer insolvency and delinquency are an integral aspect of the business of insurance and are of vital public interest and concern. Source: L. 92: Entire part R&RE, p. 1428, § 14, effective July 1. 10-3-502. Definitions. As used in this part 5, unless the context otherwise requires: (1) "Ancillary state" means any state other than a domiciliary state. (2) "Creditor" means a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, fixed or contingent, or absolute. (3) "Delinquency proceeding" means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer. (4) "Doing business" includes any of the following acts, whether effected by mail or otherwise: (a) Issuing or delivering contracts of insurance to persons resident in this state; (b) Soliciting applications for such contracts or other negotiations preliminary to the execution of such contracts; (c) Collecting premiums, membership fees, assessments, or other consideration for such contracts; (d) Transacting matters subsequent to execution of such contracts and arising out of them; or (e) Operating under a license or certificate of authority, as an insurer, issued by the commissioner or the insurance department of any state other than Colorado. (5) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, its state of entry. (6) "Fair consideration" is given for property or an obligation when: (a) In exchange for such property or obligation in good faith and as a fair equivalent therefor, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or (b) Such property or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared to the value of the property or obligation obtained. (6.5) "Federal home loan bank" means an institution chartered under the "Federal Home Loan Bank Act", 12 U.S.C. sec. 1421 et seq., or its successor statute. (7) "Foreign country" means any other jurisdiction not in any state. (8) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, "general assets" includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets. (9) "Guaranty association" means the Colorado insurance guaranty association created in part 5 of article 4 of this title, the life and health insurance protection association created in article 20 of this title, and any other similar entity now or hereafter created by this state for the Colorado Revised Statutes 2019 Page 167 of 943 Uncertified Printout payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entity now in existence in, or hereafter created by, any other state. (10) "Insolvency" or "insolvent" means: (a) For an insurer issuing only assessable fire insurance policies: (I) The inability to pay any obligation within thirty days after the obligation becomes payable; or (II) If an assessment is made within thirty days after the date the obligation becomes payable, the inability to pay such obligation thirty days following the date specified in the first assessment notice issued after the date of loss. (b) For any other insurer, that it is unable to pay its obligations when they are due, or that it is deemed insolvent pursuant to section 10-3-212. (11) "Insurance department" means the commissioner or other government official or agency of a state other than Colorado exercising powers and duties substantially equivalent to those of the commissioner or the division. (12) "Insurer" means any person who has done, purports to do, is doing, or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, the commissioner or any insurance department. (13) "Preferred claim" means any claim with respect to which the terms of this part 5 accord priority of payment from the general assets of the insurer. (14) "Receiver" means a receiver, liquidator, rehabilitator, or conservator. (15) "Reciprocal state" means any state other than this state in which, in substance and effect, sections 10-3-517 (1), 10-3-551, 10-3-552, 10-3-554, 10-3-555, and 10-3-556 are in force, and in which provisions are in force requiring that the commissioner or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers. (16) "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process. (17) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by general assets. (18) "State" means any state, district, or territory of the United States and the Panama canal zone. (19) "Transfer" includes the sale and any other or different mode, direct or indirect, of disposing of or parting with property or any interest therein, or with the possession thereof, or of fixing a lien upon property or upon any interest therein, absolutely or conditionally, voluntarily, either by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor. Source: L. 92: Entire part R&RE, p. 1429, § 14, effective July 1. L. 2014: (6.5) added, (HB 14-1215), ch. 57, p. 257, § 1, effective March 21. Editor's note: This section is similar to former § 10-3-502 as it existed prior to 1992. Colorado Revised Statutes 2019 Page 168 of 943 Uncertified Printout Cross references: For insurance definitions generally, see § 10-1-102. 10-3-503. Persons covered. (1) The proceedings authorized by this part 5 may be applied to: (a) All insurers who are doing, or have done, an insurance business in this state and against whom claims arising from that business may exist now or in the future; (b) All insurers who purport to do an insurance business in this state; (c) All insurers who have insureds resident in this state; (d) All other persons organized or in the process of organizing with the intent to do an insurance business in this state; (e) All fraternal benefit societies and beneficial societies subject to article 14 of this title; (f) All title insurance companies subject to the "Title Insurance Code of Colorado", article 11 of this title; (g) All health care plans subject to the "Prepaid Dental Care Plan Law of Colorado", article 16.5 of this title, or the "Colorado Health Maintenance Organization Act", article 17 of this title; and (h) All employers' self-insurance pools created pursuant to section 8-44-205, C.R.S. Source: L. 92: Entire part R&RE, p. 1431, § 14, effective July 1. Editor's note: (1) The "Prepaid Dental Care Plan Law of Colorado", referred to in subsection (1)(g), was repealed, effective July 1, 1992. Current provisions relating to prepaid dental care plans are located in part 5 of article 16 of this title 10. (2) The "Colorado Health Maintenance Organization Act", referred to in subsection (1)(g), was repealed, effective July 1, 1992. Current provisions relating to HMOs are located in parts 1 and 4 of article 16 of this title 10. 10-3-504. Jurisdiction - venue. (1) No delinquency proceeding shall be commenced under this part 5 by anyone other than the commissioner, and no court shall have jurisdiction to entertain, hear, or determine any proceeding commenced by any other person. (2) The district court in and for the city and county of Denver shall have jurisdiction to entertain, hear, or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of any insurer, or praying for an injunction or restraining order or other relief preliminary to, incidental to, or relating to such proceedings other than in accordance with this part 5. (3) In addition to other grounds for jurisdiction provided by law, the district court in and for the city and county of Denver has jurisdiction over a person served pursuant to the rules of civil procedure or other applicable provisions of law in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state if: (a) The person served is an agent, broker, or other person who has at any time written policies of insurance for or has acted in any manner whatsoever on behalf of an insurer against which a delinquency proceeding has been instituted in any action resulting from or incident to such a relationship with the insurer; or Colorado Revised Statutes 2019 Page 169 of 943 Uncertified Printout (b) The person served is a reinsurer who has at any time entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been instituted, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or (c) The person served is or has been an officer, director, manager, trustee, organizer, promoter, or other person in a position of comparable authority or influence over an insurer against which a delinquency proceeding has been instituted, in any action resulting from or incident to such a relationship with the insurer; or (d) The person served is or was at the time of the institution of the delinquency proceeding against the insurer holding assets in which the receiver claims an interest on behalf of the insurer, in any action concerning such assets; or (e) The person served is obligated to the insurer in any way whatsoever, in any action on or incident to the obligation. (4) If the court on motion of any party finds that any action should as a matter of substantial justice be tried in a forum outside this state, the court may enter an appropriate order to stay further proceedings on the action in this state. (5) All actions authorized pursuant to this part 5 shall be brought in the district court in and for the city and county of Denver. Source: L. 92: Entire part R&RE, p. 1432, § 14, effective July 1. Editor's note: This section is similar to former § 10-3-503 as it existed prior to 1992. 10-3-504.5. Application for receivership. No application or proceeding for a receivership of any domestic insurance company shall be made in any court in this state by any person, nor shall any court receive or entertain any such application or proceeding, unless and until such application is approved by the commissioner, and then such application shall be made only by the attorney general of the state. The commissioner shall not give said approval until after the examination and hearing by the commissioner and the attorney general, which shall not be made public, at which the company affected shall be given ample opportunity to submit the facts as to its condition. Any person who violates any provisions of this section is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not less than one thousand dollars, or by imprisonment in the county jail for not less than one month nor more than one year, or by both such fine and imprisonment. Source: L. 92: Entire part R&RE, p. 1433, § 14, effective July 1. Editor's note: This section is similar to former § 10-3-503 as it existed prior to 1992. 10-3-505. Injunctions - orders. (1) Any receiver appointed in a proceeding under this part 5 may at any time apply for, and any court of general jurisdiction may grant, such restraining orders, preliminary and permanent injunctions, and other orders as may be deemed necessary and proper to prevent: (a) The transaction of further business; (b) The transfer of property; (c) Interference with the receiver or with a proceeding under this part 5; Colorado Revised Statutes 2019 Page 170 of 943 Uncertified Printout (d) Waste of the insurer's assets; (e) Dissipation or transfer, or both, of bank accounts; (f) The institution or further prosecution of any actions or proceedings; (g) The obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets, or its policyholders; (h) The levying of execution against the insurer, its assets, or its policyholders; (i) The making of any sale or deed for nonpayment of taxes or assessments that would tend to lessen the value of the assets of the insurer; (j) The withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or (k) Any other threatened or contemplated action that might tend to lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders or the administration of any proceeding under this part 5. (2) The receiver may, if necessary, apply to any court outside of the state for the relief described in subsection (1) of this section. (3) Notwithstanding subsections (1) and (2) of this section and any other provision of this title, a federal home loan bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under a security agreement or under any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which the federal home loan bank is a party. Source: L. 92: Entire part R&RE, p. 1434, § 14, effective July 1. L. 2014: (3) added, (HB 14-1215), ch. 57, p. 257, § 2, effective March 21. 10-3-506. Cooperation of officers, owners, and employees. (1) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other person with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the commissioner in any proceeding under this part 5 or any investigation preliminary to the proceeding. The term "person" as used in this section shall include any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. "To cooperate" shall include, but shall not be limited to, the following: (a) To reply promptly in writing to any inquiry from the commissioner requesting such a reply; and (b) To make available to the commissioner any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in the person's possession, custody, or control. (2) No person shall obstruct or interfere with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto. (3) This section shall not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation or other delinquency proceedings or other orders. (4) Any person included within subsection (1) of this section who fails to cooperate with the commissioner, or any person who obstructs or interferes with the commissioner in the Colorado Revised Statutes 2019 Page 171 of 943 Uncertified Printout conduct of any delinquency proceeding or any investigation preliminary or incidental thereto, or who violates any valid order of the commissioner issued pursuant to this part 5 may: (a) Be subject to a fine not to exceed ten thousand dollars or to imprisonment for a term of not more than one year, or both; or (b) After a hearing, be subject to the imposition by the commissioner of a civil penalty not to exceed ten thousand dollars or to the revocation or suspension of any insurance licenses issued by the commissioner, or to both such civil penalty and such revocation or suspension. Source: L. 92: Entire part R&RE, p. 1434, § 14, effective July 1. 10-3-507. Continuation of delinquency proceedings. Every proceeding commenced prior to July 1, 1992, shall be deemed to have been commenced under this part 5 for the purpose of conducting the proceeding thereafter; except that, in the discretion of the commissioner, the proceeding may be continued, in whole or in part, as it would have been continued had this part 5 not been enacted. Source: L. 92: Entire part R&RE, p. 1435, § 14, effective July 1. 10-3-508. Condition on release from delinquency proceedings. (1) No insurer subject to any delinquency proceedings, whether formal, informal, administrative, or judicial, shall: (a) Be released from such proceeding, unless such proceeding is converted into a judicial rehabilitation or liquidation proceeding; (b) Be permitted to solicit or accept new business or request or accept the restoration of any suspended or revoked license or certificate of authority; (c) Be returned to the control of its shareholders or private management; or (d) Have any of its assets returned to the control of its shareholders or private management until all payments of or on account of the insurer's contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the insurer shall have been approved by the guaranty association. Source: L. 92: Entire part R&RE, p. 1435, § 14, effective July 1. 10-3-509. Court's seizure order. (1) The commissioner may file in the district court in and for the city and county of Denver a petition alleging, with respect to a domestic insurer: (a) That there exists any fact or circumstance that would justify a court order for a formal delinquency proceeding against an insurer under this part 5; (b) That the interests of policyholders, creditors, or the public will be endangered by delay; and (c) That an order, the contents of which shall be furnished to the court by the commissioner, is necessary to protect the interests of policyholders, creditors, or the public. (2) Upon a filing pursuant to subsection (1) of this section, the court may issue forthwith, ex parte, and without a hearing, the requested order which shall direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer, and of the premises occupied by the insurer for Colorado Revised Statutes 2019 Page 172 of 943 Uncertified Printout transaction of its business, and shall until further order of the court enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from the transaction of its business except with the written consent of the commissioner. (3) The court shall specify in the order what its duration shall be, which shall be such time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under this part 5 after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this part 5 shall ipso facto vacate the seizure order. For purposes of this section, a "formal proceeding" means any liquidation or rehabilitation proceeding. (4) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer. (5) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of such order for a hearing and review of the order. The court shall hold such a hearing and review not more than fifteen days after the request. A hearing under this subsection (5) may be held privately in chambers and it shall be so held if the insurer proceeded against so requests. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the order and may order payment from the estate of the insurer of such costs and other expenses of defense as justice may require. (6) If, at any time after the issuance of such an order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given to such person. An order that notice be given shall not stay the effect of any order previously issued by the court. Source: L. 92: Entire part R&RE, p. 1436, § 14, effective July 1. 10-3-510. Confidentiality of hearings. In all proceedings and judicial reviews thereof under section 10-3-509, all records of the insurer, other documents, and all division files and court records and papers, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless and until the court, after hearing arguments from the parties in chambers, shall order otherwise or unless the insurer requests that the matter be made public. Until such court order, all papers filed with the clerk of the court shall be held in a confidential file. Source: L. 92: Entire part R&RE, p. 1437, § 14, effective July 1. 10-3-511. Grounds for rehabilitation. (1) The commissioner may apply by petition to the district court in and for the city and county of Denver for an order authorizing the commissioner to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds: (a) The insurer is in such condition that the further transaction of business would be hazardous financially to its policyholders or creditors or to the public. Colorado Revised Statutes 2019 Page 173 of 943 Uncertified Printout (b) There is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer. (c) The insurer has failed to remove any person who in fact has executive authority in the insurer, whether such person is an officer, manager, general agent, employee, or other person, if the person has been found after notice and hearing by the commissioner to be dishonest or untrustworthy in a way affecting the insurer's business. (d) Control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy. (e) Any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director or trustee, employee, or other person, has refused to be examined under oath by the commissioner concerning the insurer's affairs, whether in this state or elsewhere, and after reasonable notice of the fact, the insurer has failed promptly and effectively to terminate the employment and status of the person and all of such person's influence on management. (f) After demand by the commissioner under section 10-1-204 or under this part 5, the insurer has failed to promptly make available for examination any of its own property, books, accounts, documents, or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer insofar as they pertain to the insurer. (g) Without first obtaining the written consent of the commissioner, the insurer has transferred, or attempted to transfer, in a manner contrary to part 7 or 8 of this article, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person. (h) The insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator, sequestrator, or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state, and such appointment has been made or is imminent, and such appointment might oust the courts of this state of jurisdiction or might prejudice the orderly conduct of delinquency proceedings pursuant to this part 5. (i) The insurer has willfully violated its charter or articles of incorporation, its bylaws, any insurance law of this state, or any valid order of the commissioner. (j) The insurer has failed to pay within thirty days after the due date any obligation to any state or any subdivision thereof or any judgment entered in any state, if the court in which such judgment was entered had jurisdiction over such subject matter; except that such nonpayment shall not be a ground for rehabilitation until thirty days after the termination of any good-faith effort by the insurer to contest the obligation, whether such effort is made before the commissioner or in the courts, or the insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full. (k) The insurer has failed to file its annual report or other financial report required by statute within the time allowed by law and, after written demand by the commissioner, has failed to give an adequate explanation for such failure immediately. Colorado Revised Statutes 2019 Page 174 of 943 Uncertified Printout (l) The board of directors of, or the holders of a majority of the shares entitled to vote in, or a majority of those individuals entitled to the control of, those entities specified in section 103-503 request or consent to rehabilitation under this part 5. (m) The insurer is impaired as defined in section 10-3-212. Source: L. 92: Entire part R&RE, p. 1438, § 14, effective July 1. 10-3-512. Rehabilitation orders. (1) An order to rehabilitate the business of a domestic insurer or an alien insurer domiciled in this state shall appoint the commissioner as the rehabilitator and shall direct the rehabilitator forthwith to take possession of the assets of the insurer and to administer such assets under the general supervision of the court. The filing or recording of the order with the clerk of the district court in and for the city and county of Denver or with the recorder of deeds of the county in which the principal business of the company is conducted or the county in which its principal office or place of business is located shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded with such recorder of deeds. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator. (2) Any order issued under this section shall require accounting to the court by the rehabilitator. Accounting shall be at such intervals as the court specifies in its order, but no less frequently than semiannually. Each accounting shall include a report concerning the rehabilitator's opinion as to the likelihood that a plan under section 10-3-513 (4) will be prepared by the rehabilitator and the timetable for doing so. (3) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contract of the insurer, nor shall it be a basis for retroactive revocation or retroactive cancellation of any contract of the insurer, unless such revocation or cancellation is done by the rehabilitator pursuant to section 10-3-513. Source: L. 92: Entire part R&RE, p. 1439, § 14, effective July 1. 10-3-513. Powers and duties of rehabilitator. (1) The commissioner as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the commissioner may employ such counsel, clerks, and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the commissioner. The commissioner, as rehabilitator, may, with the approval of the court, appoint an advisory committee of policyholders, claimants, or other creditors including guaranty associations should such a committee be deemed necessary. Such committee shall serve at the pleasure of the commissioner and shall serve without compensation other than reimbursement for reasonable travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or by the court in rehabilitation proceedings conducted under this part 5. (2) The rehabilitator may take such action as the rehabilitator deems necessary or appropriate to reform and revitalize the insurer, and shall have all the powers of the insurer's Colorado Revised Statutes 2019 Page 175 of 943 Uncertified Printout directors, officers, and managers, whose authority shall be suspended except insofar as they are redelegated by the rehabilitator. The rehabilitator shall have full power to direct, manage, hire, and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer. (3) If it appears to the rehabilitator that there has been criminal or tortious conduct or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee, or other person, the rehabilitator may pursue all appropriate legal remedies on behalf of the insurer. (4) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate, the rehabilitator shall prepare a plan to effect such changes. Upon application of the rehabilitator for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, if all rights of shareholders are first relinquished, the plan proposed may include the imposition of liens upon the policies of the company. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary. (5) The rehabilitator shall have the power under sections 10-3-525 and 10-3-526 to avoid fraudulent transfers. Source: L. 92: Entire part R&RE, p. 1440, § 14, effective July 1. 10-3-514. Actions by and against rehabilitator. (1) Any court in this state before which any action or proceeding in which the insurer is a party, or is obligated to defend a party, is pending when a rehabilitation order against the insurer is entered shall stay the action or proceeding for a minimum of ninety days and for such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as the rehabilitator deems necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer. (2) No statute of limitations or defense of laches shall run with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting or denying that petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced within a period of not less than sixty days after the order of rehabilitation is entered or the petition is denied. The rehabilitator may, upon an order for rehabilitation, within one year or such other longer time as applicable law may permit, institute an action or proceeding on behalf of the insurer upon any cause of action against which the period of limitation fixed by applicable law had not expired at the time of the filing of the petition upon which such order is entered. (3) Any guaranty association or foreign guaranty association covering life or health insurance or annuities shall have standing to appear in any court proceeding concerning the Colorado Revised Statutes 2019 Page 176 of 943 Uncertified Printout rehabilitation of a life or health insurer if such association is or may become liable to act as a result of the rehabilitation. (4) Notwithstanding subsection (1) of this section and any other provision of this title, a federal home loan bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under a security agreement or under any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which the federal home loan bank is a party. Source: L. 92: Entire part R&RE, p. 1441, § 14, effective July 1. L. 2014: (4) added, (HB 14-1215), ch. 57, p. 257, § 3, effective March 21. 10-3-514.5. Immunity and indemnification of receiver and employees applicability. (1) For the purposes of this section, the persons entitled to protection are: (a) All receivers responsible for the conduct of a delinquency proceeding under this part 5 including present and former receivers; and (b) Their employees, meaning all present and former special deputies and assistant special deputies appointed by the commissioner and all persons whom the commissioner, special deputies, or assistant special deputies have employed to assist in a delinquency proceeding under this part 5. Attorneys, accountants, auditors, and other professional persons or firms who are retained by the receiver as independent contractors and their employees shall not be considered employees of the receiver for purposes of this section. (2) The receiver and his employees shall have official immunity and shall be immune from suit and liability, both personally and in their official capacities, for any claim for damage to or loss of property or personal injury or other civil liability caused by or resulting from any alleged act, error, or omission of the receiver or any employee arising out of or by reason of their duties or employment; except that nothing in this subsection (2) shall be construed to hold the receiver or any employee immune from suit and liability for any damage, loss, injury, or liability caused by the intentional or willful and wanton misconduct of the receiver or of any employee. (3) If any legal action is commenced against the receiver or any employee, whether against him personally or in his official capacity, alleging property damage, property loss, personal injury, or other civil liability caused by or resulting from any alleged act, error, or omission of the receiver or any employee arising out of or by reason of their duties or employment, the receiver and any employee shall be indemnified from the assets of the insurer for all expenses, attorney fees, judgments, settlements, decrees, or amounts due and owing or paid in satisfaction of or incurred in the defense of such legal action unless it is determined upon a final adjudication on the merits that the alleged act, error, or omission of the receiver or employee giving rise to the claim did not arise out of or by reason of his duties or employment, or was caused by intentional or willful and wanton misconduct. (4) Attorney fees and any and all related expenses incurred in defending a legal action for which immunity or indemnity is available under this section shall be paid from the assets of the insurer, as they are incurred, in advance of the final disposition of such action upon receipt of an undertaking by or on behalf of the receiver or employee to repay the attorney fees and expenses if it shall ultimately be determined upon a final adjudication on the merits that the receiver or employee is not entitled to immunity or indemnity under this section. Colorado Revised Statutes 2019 Page 177 of 943 Uncertified Printout (5) Any indemnification for expense payments, judgments, settlements, decrees, attorney fees, surety bond premiums, or other amounts paid from the insurer's assets pursuant to this section shall be an administrative expense of the insurer. (6) In the event of any actual or threatened litigation against a receiver or any employee for which immunity or indemnity may be available under this section, a reasonable amount of funds which in the judgment of the commissioner may be needed to provide immunity or indemnity shall be segregated and reserved from the assets of the insurer as security for the payment of indemnity until such time as all applicable statutes of limitation have run and all actual or threatened actions against the receiver or any employee have been completely and finally resolved and all obligations of the insurer and the commissioner under this section have been satisfied. (7) In lieu of segregation and reservation of funds, the commissioner may, in the commissioner's discretion, obtain a surety bond or make other arrangements which will enable the commissioner to fully secure the payment of all obligations under this section. (8) If any legal action against an employee for which indemnity may be available under this section is settled prior to final adjudication on the merits, the insurer shall pay the settlement amount on behalf of the employee, or indemnify the employee for the settlement amount, unless the commissioner determines: (a) That the claim did not arise out of or by reason of the employee's duties or employment; or (b) That the claim was caused by the intentional or willful and wanton misconduct of the employee. (9) In any legal action in which the receiver is a defendant, that portion of any settlement relating to the alleged act, error, or omission of the receiver shall be subject to the approval of the court before which the delinquency proceeding is pending. The court shall not approve that portion of the settlement if it determines: (a) That the claim did not arise out of or by reason of the receiver's duties or employment; or (b) That the claim was caused by the intentional or willful and wanton misconduct of the receiver. (10) Nothing contained or implied in this section shall operate, or be construed or applied, to deprive the receiver or any employee of any immunity, indemnity, benefits of law, rights, or any defense otherwise available. (11) (a) Subsection (2) of this section shall apply to any suit based in whole or in part on any alleged act, error, or omission occurring on or after July 1, 1992. (b) No legal action shall lie against the receiver or any employee based in whole or in part on any alleged act, error, or omission which took place prior to July 1, 1992, unless suit is filed and valid service of process is obtained within twelve months after July 1, 1992. (c) Subsections (3) to (9) of this section shall apply to any suit which is pending on or filed after July 1, 1992, without regard to when the alleged act, error, or omission took place. Source: L. 92: Entire part R&RE, p. 1442, § 14, effective July 1. 10-3-515. Termination of rehabilitation. (1) Whenever the commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to Colorado Revised Statutes 2019 Page 178 of 943 Uncertified Printout creditors, policyholders, or the public, or would be futile, the commissioner may petition the district court in and for the city and county of Denver for an order of liquidation. A petition under this subsection (1) shall have the same effect as a petition under section 10-3-516. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition and may order payment from the estate of the insurer of such costs and other expenses of defense as justice may require. (2) The protection of the interests of insureds, claimants, and the public requires the timely performance of all insurance policy obligations. If the payment of an insurer's policy obligations is suspended in substantial part for a period of six months at any time after the appointment of the rehabilitator and the rehabilitator has not filed an application for approval of a plan under section 10-3-513 (5), the rehabilitator shall petition the court for an order of liquidation on grounds of insolvency. (3) The rehabilitator may at any time petition the district court in and for the city and county of Denver for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such petition as justice may require. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under section 10-3-511 no longer exist, it shall order that the insurer be restored to possession of its property and the control of the business. The court may also make such a finding and issue such an order at any time upon its own motion. Source: L. 92: Entire part R&RE, p. 1445, § 14, effective July 1. 10-3-516. Grounds for liquidation. (1) The commissioner may petition the district court in and for the city and county of Denver for an order directing the commissioner to liquidate a domestic insurer or an alien insurer domiciled in this state on the basis: (a) Of any ground for an order of rehabilitation as specified in section 10-3-511, whether or not there has been a prior order directing the rehabilitation of the insurer; (b) That the insurer is insolvent; or (c) That the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public. Source: L. 92: Entire part R&RE, p. 1446, § 14, effective July 1. 10-3-517. Liquidation orders. (1) An order to liquidate the business of a domestic insurer shall appoint the commissioner as liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator shall be vested by operation of law with title to all of the property, contracts, rights of action, and books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of the district court in and for the city and county of Denver and the recorder of deeds of the county in which its principal office or place of business is located or, in the case of real estate, with the recorder of deeds of the county where the property is located, shall impart the Colorado Revised Statutes 2019 Page 179 of 943 Uncertified Printout same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded with that recorder of deeds. (2) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation except as provided in sections 10-3-518 and 10-3-536. (3) An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer; except that the assets and the business in the United States shall be the only assets and business included therein. (4) At the time of petitioning for an order of liquidation or at any time thereafter, the commissioner, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and holding such hearing as it deems proper, the court may make the declaration. (5) Any order issued under this section shall require financial reports to the court by the liquidator. Financial reports shall include, at a minimum, the assets and liabilities of the insurer and all funds received or disbursed by the liquidator during the current period. Financial reports shall be filed within one year of the liquidation order and at least annually thereafter. (6) Within five days after July 1, 1992, or, if later, within five days after the initiation of an appeal of an order of liquidation, unless such order has been stayed, the commissioner shall present for the court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies, during the pendency of the appeal. Such plan shall provide for the continued performance and payment of policy claims obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition will not, in the judgment of the commissioner, support the full performance of all policy claims obligations during the pendency of the appeal, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the commissioner finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The court shall examine the plan submitted by the commissioner and, if it finds the plan to be in the best interests of the parties, the court shall approve the plan. No action shall lie against the commissioner or any of the commissioner's deputies, agents, clerks, assistants, or attorneys by any party based on preference in an appeal pendency plan approved by the court. (7) The appeal pendency plan effected pursuant to subsection (6) of this section shall not supersede or affect the obligations of any insurance guaranty association. (8) Any appeal pendency plan effected pursuant to subsection (6) of this section shall provide for equitable adjustments to be made by the liquidator to any distributions of assets to guaranty associations, in the event that the liquidator pays claims from assets of the estate which would otherwise be the obligations of any particular guaranty association but for the appeal of the order of liquidation, such that all guaranty associations equally benefit on a pro rata basis from the assets of the estate. Further, in the event an order of liquidation is set aside upon any appeal, the company shall not be released from delinquency proceedings unless and until all funds advanced by any guaranty association, including reasonable administrative expenses in Colorado Revised Statutes 2019 Page 180 of 943 Uncertified Printout connection therewith, relating to obligations of the company have been repaid in full together with interest at the judgment rate of interest, or unless an arrangement for repayment thereof has been made with the consent of all applicable guaranty associations. Source: L. 92: Entire part R&RE, p. 1446, § 14, effective July 1. 10-3-518. Continuation of coverage. (1) All policies, including bonds and other noncancellable business but not including life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of: (a) A period of thirty days from the date of entry of the liquidation order; (b) The expiration of the policy coverage; (c) The date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; (d) The effective date of a transfer of the policy obligation by the liquidator pursuant to section 10-3-520 (1)(i); or (e) The date proposed by the liquidator and approved by the court to cancel coverage. (2) An order of liquidation under section 10-3-517 shall terminate coverages at the time specified in subsection (1) of this section for purposes of any other statute. (3) Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association or foreign guaranty association. (4) Policies of life or health insurance or annuities or any period or coverage of such policies not covered by a guaranty association or foreign guaranty association shall terminate under subsections (1) and (2) of this section. Source: L. 92: Entire part R&RE, p. 1448, § 14, effective July 1. 10-3-519. Dissolution of insurer. The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time the commissioner applies for a liquidation order. The court shall order dissolution of the corporation upon petition by the commissioner upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason. Source: L. 92: Entire part R&RE, p. 1449, § 14, effective July 1. 10-3-520. Powers of liquidator. (1) The liquidator shall have the power: (a) To appoint a special deputy or deputies to act for the liquidator under this part 5, and to determine the reasonable compensation of such special deputy. The special deputy shall have all powers of the liquidator granted by this section. The special deputy shall serve at the pleasure of the liquidator. Colorado Revised Statutes 2019 Page 181 of 943 Uncertified Printout (b) To employ employees, agents, legal counsel, actuaries, accountants, appraisers, consultants, and such other personnel as the liquidator may deem necessary to assist in the liquidation; (c) To appoint, subject to the approval of the court, an advisory committee of policyholders, claimants, or other creditors including guaranty associations should such a committee be deemed necessary. Such committee shall serve at the pleasure of the commissioner and shall serve without compensation other than reimbursement for reasonable travel and per diem living expenses. No other committee of any nature shall be appointed by the commissioner or by the court in liquidation proceedings conducted under this part 5. (d) To fix the reasonable compensation of employees, agents, legal counsel, actuaries, accountants, appraisers, and consultants subject to the approval of the court; (e) To pay reasonable compensation to persons appointed and to defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the division of insurance. Any amounts so advanced for expenses of administration shall be repaid to the commissioner for the use of the division out of the first available moneys of the insurer. (f) To hold hearings, subpoena witnesses and compel their attendance, administer oaths, examine any person under oath, and compel any person to subscribe to the person's testimony after it has been correctly reduced to writing; and, in connection therewith, to require the production of any books, papers, records, or other documents which the liquidator deems relevant to the inquiry; (g) To audit the books and records of all agents of the insurer insofar as those records relate to the business activities of the insurer; (h) To collect all debts and moneys due and claims belonging to the insurer, wherever located, and for this purpose: (I) To institute timely action in other jurisdictions, in order to forestall garnishment or attachment proceedings against such debts; (II) To do such other acts as are necessary or expedient to collect, conserve, or protect its assets or property, including the power to sell, compound, compromise, or assign debts for purposes of collection upon such terms and conditions as the liquidator deems best; and (III) To pursue any creditors' remedies available to enforce the liquidator's claims; (i) To conduct public and private sales of the property of the insurer; (j) To use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under section 10-3-541; (k) To acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. The liquidator shall also have power to execute, acknowledge, and deliver any and all deeds, assignments, releases, and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation. Colorado Revised Statutes 2019 Page 182 of 943 Uncertified Printout (l) To borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to such transaction for the purpose of facilitating the liquidation. Any funds so borrowed may be repaid as an administrative expense and may be given priority over any other claims in class 1 under the priority of distribution pursuant to section 10-3-541. (m) To enter into such contracts as are necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party; except that the liquidator shall not disavow, reject, or repudiate a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party; (n) To continue to prosecute and to institute in the name of the insurer or in the liquidator's own name any and all suits and other legal proceedings, in this state or elsewhere, and to abandon the prosecution of claims deemed unprofitable to pursue further. If the insurer is dissolved under section 10-3-519, the liquidator shall have the power to apply to any court in this state or elsewhere for leave to be substituted for the insurer as plaintiff. (o) To prosecute any action which may exist on behalf of the creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer or any other person; (p) To remove any records and property of the insurer to the offices of the commissioner or to such other place as may be convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations and foreign guaranty associations shall have such reasonable access to the records of the insurer as is necessary for them to carry out their statutory obligations. (q) To deposit in one or more banks in this state such sums as are required to meet current administration expenses and dividend distributions; (r) To invest all sums not currently needed, unless the court orders otherwise; (s) To file any necessary documents for record in the office of any recorder of deeds or record office where property of the insurer is located, in this state or elsewhere; (t) To assert all defenses available to the insurer as against third persons, which defenses shall include but not be limited to statutes of limitation, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a petition in liquidation has been filed shall not bind the liquidator. Whenever a guaranty association or foreign guaranty association has an obligation to defend any suit, the liquidator shall give precedence to such obligation and may defend only in the absence of a defense by such guaranty associations. (u) To exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be conferred by law whether or not such power is conferred by sections 10-3-525 to 10-3-527; (v) To intervene in any proceeding, wherever instituted, which could result in the appointment of a receiver or trustee, and to act as the receiver or trustee whenever such appointment is offered; (w) To enter into agreements with any receiver, commissioner, or insurance department of any other state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both states; Colorado Revised Statutes 2019 Page 183 of 943 Uncertified Printout (x) To exercise, in a manner consistent with the provisions of this part 5, all powers now held or hereafter conferred upon receivers by the laws of this state. (2) (a) If a company placed in liquidation issued liability policies on a claims-made basis, and if such policies provided an option to purchase an extended period to report claims, then the liquidator may make available to holders of such policies, for a charge, an extended period to report claims subject to the conditions stated in this subsection (2). The extended reporting period shall be made available only to those insureds who have not secured substitute coverage. The extended period made available by the liquidator shall begin upon termination of any extended period to report claims in the basic policy and shall end at the earlier of the final date for filing of claims in the liquidation proceeding or eighteen months after the order of liquidation. (b) The extended period to report claims made available by the liquidator shall be subject to the terms of the policy to which it relates. The liquidator shall make available such extended period within sixty days after the order of liquidation at a charge to be determined by the liquidator subject to approval of the court. Such offer shall be deemed rejected unless the offer is accepted in writing and the charge is paid within ninety days after the order of liquidation. No commissions, premium taxes, assessments, or other fees shall be due on the charge pertaining to the extended period to report claims. (3) The enumeration, in this section, of the powers and authority of the liquidator shall not be construed as a limitation upon the liquidator, nor shall it exclude in any manner the liquidator's right to do such other acts not specifically enumerated or otherwise provided for in this section as may be necessary or appropriate for the accomplishment of, or in aid of the purpose of, liquidation. (4) Notwithstanding the powers of the liquidator as stated in subsections (1) and (2) of this section, the liquidator shall have no obligation to defend claims or to continue to defend claims subsequent to the entry of a liquidation order. Source: L. 92: Entire part R&RE, p. 1449, § 14, effective July 1. L. 2014: (1)(m) amended, (HB 14-1215), ch. 57, p. 258, § 4, effective March 21. 10-3-521. Notice to creditors and others. (1) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible: (a) By first class mail and either by telegram or telephone to the insurance department of each jurisdiction in which the insurer is doing business; (b) By first class mail to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation; (c) By first class mail to all insurance agents of the insurer; (d) By first class mail to all persons known or reasonably expected to have claims against the insurer, including all policyholders at their last known address as indicated by the records of the insurer; and (e) By publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate. (2) Notice to potential claimants under subsection (1) of this section shall require claimants to file with the liquidator their claims together with proper proofs thereof under Colorado Revised Statutes 2019 Page 184 of 943 Uncertified Printout section 10-3-535, on or before a date the liquidator shall specify in the notice. Although an earlier date may be set by the liquidator, the last day to file claims shall be no later than eighteen months after the order of liquidation. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall have a duty to keep the liquidator informed of any changes of address. (3) Notice under subsection (1) of this section to agents of the insurer and to potential claimants who are policyholders shall include, where applicable, notice that coverage by state guaranty associations may be available for all or part of policy benefits in accordance with applicable state guaranty laws. (4) The liquidator shall promptly provide to the guaranty associations such information concerning the identities and addresses of such policyholders and their policy coverages as may be within the liquidator's possession or control and shall otherwise cooperate with guaranty associations to assist them in providing to such policyholders timely notice of the guaranty associations' coverage of policy benefits, including, as applicable, coverage of claims and continuation or termination of coverages. (5) If notice is given in accordance with this section, the distribution of assets of the insurer under this part 5 shall be conclusive with respect to all claimants regardless of whether or not they received notice. Source: L. 92: Entire part R&RE, p. 1453, § 14, effective July 1. 10-3-522. Duties of agents. (1) Every person who receives notice in the form prescribed in section 10-3-521 that an insurer which the person represents as an agent is the subject of a liquidation order shall, within thirty days of such notice, provide to the liquidator, in addition to the information such person may be required to provide pursuant to section 10-3-506, all information in the agent's records related to any policy issued by the insurer through the agent, and, if the agent is a general agent, the information in the general agent's records related to any policy issued by the insurer through an agent under contract to the general agent, including the name and address of such subagent. A policy shall be deemed issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in the agent's possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another. (2) Any agent failing to provide information to the liquidator as required in subsection (1) of this section may be subject to a penalty of not more than one thousand dollars and, in addition, any licenses of any such agent may be suspended. Such penalty or suspension, or both, shall be imposed only after a hearing held by the commissioner. Source: L. 92: Entire part R&RE, p. 1454, § 14, effective July 1. 10-3-523. Actions by and against liquidator. (1) Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this state, no action at law or equity or in arbitration shall be brought against the insurer or liquidator, whether in this state or elsewhere, nor shall any such existing actions be maintained or further presented after issuance of such order. The courts of this state shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the Colorado Revised Statutes 2019 Page 185 of 943 Uncertified Printout company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever, in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, the liquidator may intervene in the action. The liquidator may defend any action in which the liquidator intervenes under this section at the expense of the estate of the insurer. (2) The liquidator may, upon or after an order for liquidation, within two years or such other longer time as applicable law may permit, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the petition, the liquidator may, for the benefit of the estate, take any such action or do any such act required of or permitted to the insurer, if the liquidator does so within a period of one hundred eighty days subsequent to the entry of an order for liquidation or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party. (3) No statute of limitation or defense of laches shall run with respect to any action against an insurer between the filing of a petition for liquidation against the insurer and the denial of the petition. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty days after the petition is denied. (4) Any guaranty association or foreign guaranty association shall have standing to appear in any court proceeding concerning the liquidation of an insurer if such association is or may become liable to act as a result of the liquidation. Source: L. 92: Entire part R&RE, p. 1455, § 14, effective July 1. 10-3-524. Collection and listing of assets. (1) As soon as practicable after the liquidation order but not later than one hundred twenty days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed in the office of the clerk of the district court in and for the city and county of Denver and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed. (2) The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation. (3) A submission to the court for disbursement of assets in accordance with section 10-3533 fulfills the requirements of subsection (1) of this section. Source: L. 92: Entire part R&RE, p. 1456, § 14, effective July 1. 10-3-525. Fraudulent transfers prior to petition. (1) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this part 5 is fraudulent as to then existing and Colorado Revised Statutes 2019 Page 186 of 943 Uncertified Printout future creditors if made or incurred without fair consideration or if made with actual intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this part 5, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value; except that any purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee. (2) (a) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under section 10-3-527 (3). (b) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee. (c) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created. (d) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition. (e) The provisions of this subsection (2) shall apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers. (3) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (1) of this section if: (a) The transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transactions, unless the reinsurer gives a present fair equivalent value for the release; and (b) Any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced. (4) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (1) of this section shall be personally liable therefore and shall be bound to account to the liquidator. (5) Notwithstanding subsection (1) of this section and any other provision of this title, a receiver shall not avoid any transfer of, or any obligation to transfer, money or any other property arising under or in connection with a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party; except that a transfer may be avoided under this section if it was made with actual intent to hinder, delay, or defraud either existing or future creditors. Source: L. 92: Entire part R&RE, p. 1456, § 14, effective July 1. L. 2014: (5) added, (HB 14-1215), ch. 57, p. 258, § 5, effective March 21. Colorado Revised Statutes 2019 Page 187 of 943 Uncertified Printout 10-3-526. Fraudulent transfer after petition. (1) After a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value; or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefore, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the recorder of deeds in the county where any real property in question is located. The exercise by a court of the United states or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale. (2) After a petition for rehabilitation or liquidation has been filed and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted: (a) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value; or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefore, for which amount the transferee shall have a lien on the property so transferred. (b) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon the insurer's order, with the same effect as if the petition were not pending. (c) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith. (d) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator. (3) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (1) of this section shall be personally liable therefore and shall be bound to account to the liquidator. (4) Nothing in this part 5 shall impair the negotiability of currency or negotiable instruments. (5) Notwithstanding subsection (1) of this section and any other provision of this title, a receiver shall not avoid any transfer of, or any obligation to transfer, money or any other property arising under or in connection with a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party; except that a transfer may be avoided under this section if it was made with actual intent to hinder, delay, or defraud either existing or future creditors. Source: L. 92: Entire part R&RE, p. 1458, § 14, effective July 1. L. 2014: (5) added, (HB 14-1215), ch. 57, p. 258, § 6, effective March 21. Colorado Revised Statutes 2019 Page 188 of 943 Uncertified Printout 10-3-527. Voidable preferences and liens. (1) (a) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under this part 5, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter. (b) Any preference may be avoided by the liquidator if: (I) The insurer was insolvent at the time of the transfer; or (II) The transfer was made within four months before the filing of the petition; or (III) The creditor receiving it or to be benefited thereby or the agent of any such creditor acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or (IV) The creditor receiving it was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not such person held such position, or any shareholder holding directly or indirectly more than five percent of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length. (c) Where the preference is voidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property; except where a bona fide purchaser or lienor has given less than fair equivalent value, such purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given by the purchaser. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator. (d) Notwithstanding paragraph (b) of this subsection (1) and any other provision of this title, a liquidator or receiver shall not avoid any preference arising under or in connection with a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party. (2) (a) (I) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee. (II) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee. (b) (I) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created. (II) A transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition. Colorado Revised Statutes 2019 Page 189 of 943 Uncertified Printout (c) The provisions of this subsection (2) shall apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers. (3) (a) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time. (b) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (2) of this section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subsection (2) of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling. (4) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (2) of this section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration. (5) If any lien deemed voidable under paragraph (b) of subsection (1) of this section has been dissolved by the furnishing of a bond or other obligation and the surety which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under this part 5 which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable. (6) The property affected by any lien deemed voidable under subsections (1) and (5) of this section shall be discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the liquidator; except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator. (7) The district court in and for the city and county of Denver shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may Colorado Revised Statutes 2019 Page 190 of 943 Uncertified Printout elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times as the court shall fix. (8) The liability of the surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under subsection (7) of this section to the extent of the amount paid to the liquidator. (9) If a creditor has been preferred, and afterward in good faith gives the insurer further credit without security of any kind, for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from such insurer. (10) If an insurer shall, directly or indirectly, within four months before the filing of a successful petition for liquidation under this part 5, or at any time in contemplation of a proceeding to liquidate it, pay money or transfer property to an attorney-at-law for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefits of the estate; except that, where the attorney is in a position of influence in the insurer or an affiliate thereof, payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provision of subparagraph (IV) of paragraph (b) of subsection (1) of this section. (11) (a) Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving any preference when any such person has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is a reasonable cause to so believe if the transfer was made within four months before the date of filing of a successful petition for liquidation. (b) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subsection (1) of this section shall be personally liable therefor and shall be bound to account to the liquidator. (c) Nothing in this subsection (11) shall prejudice any other claim by the liquidator against any person. Source: L. 92: Entire part R&RE, p. 1459, § 74, effective July 1. L. 2014: (1)(d) added, (HB 14-1215), ch. 57, p. 258, § 7, effective March 21. 10-3-528. Claims of holders of void or voidable rights. (1) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance voidable under this part 5 shall be allowed unless such creditor surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within thirty days from the date of the entering of the final judgment; except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding. Colorado Revised Statutes 2019 Page 191 of 943 Uncertified Printout (2) A claim allowable under subsection (1) of this section by reason of the avoidance, whether voluntary or involuntary, or a preference, lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused last filing under section 10-3-534 if filed within thirty days from the date of the avoidance, or within the further time allowed by the court pursuant to subsection (1) of this section. Source: L. 92: Entire part R&RE, p. 1463, § 14, effective July 1. 10-3-529. Setoffs - effective date - applicability. (1) Notwithstanding any other provision of this title, mutual debts or mutual credits, whether arising out of one or more contracts between the insurer and another person in connection with any action or proceeding under this part 5, shall be set off, and the balance only shall be allowed or paid, except as provided in subsections (2) and (4) of this section and section 10-3-532. (2) No setoff shall be allowed in favor of any person where: (a) The obligation of the insurer to the person would not at the date of the filing of a petition for receivership entitle the person to share as a claimant in the assets of the insurer; or (b) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; or (c) The obligation of the insurer is owed to an affiliate of such person, or any other entity or association other than the person; or (d) The obligation of the person is owed to an affiliate of the insurer or to any other entity or association other than the insurer; or (e) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or (f) The obligations between the person and the insurer arise from business in which either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations; except that, with regard to such business, the commissioner has discretion to allow certain setoffs if the commissioner deems them appropriate. (3) (Deleted by amendment, L. 2001, p. 229, § 1, effective July 1, 2001.) (4) The commissioner may promulgate rules and regulations to implement this section including the establishment of reasonable accounting requirements. (5) Notwithstanding any other provision of this section to the contrary, a setoff of sums due on obligations in the nature of those set forth in paragraph (f) of subsection (2) of this section shall be allowed for those sums accruing from business written where the contracts were entered into, renewed, or extended with the express written approval of the insurance department of the state of domicile of the now insolvent insurer and, in the judgment of such insurance department, it was necessary to provide reinsurance in order to prevent or mitigate a threatened impairment or insolvency of a domiciliary insurer in connection with the exercise of the said insurance department's regulatory responsibilities. (6) This section shall be effective January 1, 1993, and shall apply to all contracts entered into, renewed, extended, or amended on or after said date and to debts or credits arising from any business written or transactions occurring after January 1, 1993, pursuant to any contract including those in existence prior to January 1, 1993, and shall supersede any Colorado Revised Statutes 2019 Page 192 of 943 Uncertified Printout agreements or contractual provisions which might be construed to enlarge the setoff rights of any person under any contract with the insurer. For purposes of this section, any change in the terms of, or consideration for, any such contract shall be deemed an amendment. Source: L. 92: Entire part R&RE, p. 1463, § 14, effective July 1. L. 2001: (1), (2)(a), (2)(f), and (3) amended, p. 229, § 1, effective July 1. 10-3-530. Assessments. (1) As soon as practicable but not more than two years after the date of an order of liquidation under section 10-3-517 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth: (a) The reasonable value of the assets of the insurer; (b) The insurer's probable total liabilities; (c) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment; and (d) A recommendation as to whether or not an assessment should be made and in what amount. (2) (a) Upon the basis of the report provided pursuant to subsection (1) of this section and including any supplements and amendments thereto, the district court in and for the city and county of Denver may levy one or more assessments against all members of the insurer who are subject to assessment. (b) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount by which the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically. (3) After levy of assessment under subsection (2) of this section, the liquidator shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator should not pursue a judgment therefor. (4) The liquidator shall give notice of the order to show cause by publication and by first class mail to each member liable under such order mailed to the member's last known address as it appears on the insurer's records, at least twenty days before the return day of the order to show cause. (5) (a) If a member does not appear and serve duly verified objections upon the liquidator on or before the return day of the order to show cause under subsection (3) of this section, the court shall make an order adjudging the member liable for the amount of the assessment together with costs, and the liquidator shall have a judgment against the member therefor. (b) If, on or before such return day, the member appears and serves duly verified objections upon the liquidator, the commissioner may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. In the event that the commissioner determines that such objections do not warrant relief from assessment, the member may request the court to review the matter and vacate the order to show cause. (6) The liquidator may enforce any order or collect any judgment under subsection (5) of this section by any lawful means. Colorado Revised Statutes 2019 Page 193 of 943 Uncertified Printout Source: L. 92: Entire part R&RE, p. 1465, § 14, effective July 1. 10-3-531. Reinsurers' liability. (1) Except as otherwise provided in subsection (2) of this section, the amount recoverable by the liquidator from reinsurers shall be payable under a contract or contracts reinsured by the reinsurer on the basis of reported claims allowed by the liquidation court without diminution as a result of the insolvency of the ceding insurer. Such payment shall be made directly to the ceding insurer or to its domiciliary liquidator unless the contract or other written agreement specifically provides another payee of such reinsurance in the event of the insolvency of the ceding insurer. (2) Notwithstanding subsection (1) of this section, if a life and health insurance guaranty association has elected to succeed to the rights and obligations of the insolvent insurer under the contract of reinsurance, whether pursuant to section 10-20-108 (13)(h) or otherwise, then the reinsurer's liability to pay covered reinsured claims shall continue under the contract of reinsurance, subject to the payment to the reinsurer of the reinsurance premiums for such coverage. Payment for such reinsured claims shall only be made by the reinsurer pursuant to the direction of the guaranty association or its designated successor. Any payment made at the direction of the guaranty association or its designated successor by the reinsurer shall discharge the reinsurer of all further liability to any other party for such claim payment. Source: L. 92: Entire part R&RE, p. 1466, § 14, effective July 1. L. 2001: Entire section amended, p. 230, § 2, effective July 1. 10-3-532. Recovery of premiums owed. (1) (a) An agent, broker, premium finance company, or any other person other than the insured that is responsible for the payment of a premium shall be obligated to pay any unpaid premium for the full policy term due the insurer at the time of the declaration of insolvency, whether earned or unearned, as shown on the records of the insurer. The liquidator shall also have the right to recover from such person any part of an unearned premium that represents commission of such person. Credits or setoffs or both shall not be allowed to an agent, broker, or premium finance company for any amounts advanced to the insurer by the agent, broker, or premium finance company on behalf of, but in the absence of a payment by, the insured. (b) An insured shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer. (2) Upon satisfactory evidence of a violation of this section, the commissioner may pursue either one or both of the following courses of action: (a) Suspend, revoke, or refuse to renew the licenses of such offending party or parties; (b) Impose a penalty of not more than one thousand dollars for each and every act in violation of this section by said party or parties. (3) Before the commissioner takes any action set forth in subsection (2) of this section, the commissioner shall give written notice to the person, company, association, or exchange accused of violating the law, stating specifically the nature of the alleged violation and fixing a time and place, at least ten days thereafter, when a hearing on the matter shall be held. After such hearing, or upon failure of the accused to appear at such hearing the commissioner, if the commissioner finds the accused committed any such violation, shall impose such penalties under subsection (2) of this section as are deemed advisable. Colorado Revised Statutes 2019 Page 194 of 943 Uncertified Printout (4) When the commissioner takes action in any or all of the ways set out in subsection (2) of this section, the party aggrieved may appeal from said action to the district court in and for the city and county of Denver. Source: L. 92: Entire part R&RE, p. 1466, § 14, effective July 1. 10-3-533. Domiciliary liquidator's proposal to distribute assets. (1) Within one hundred twenty days after a final determination of insolvency of an insurer by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to disburse assets out of marshaled assets, from time to time and as such assets become available, to a guaranty association or foreign guaranty association having obligations because of such insolvency. If the liquidator determines that there are insufficient assets to disburse, the application required by this section shall be considered satisfied by a filing by the liquidator stating the reasons for such determination. (2) The proposal referenced in subsection (1) of this section shall at least include provisions for: (a) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within the priorities established in section 10-3-541 (1) and (2); (b) Disbursement of the assets marshaled to date and subsequent disbursement of assets as they become available; (c) Equitable allocation of disbursements to each of the guaranty associations and foreign guaranty associations entitled thereto; (d) The securing, by the liquidator, from each of the associations entitled to disbursements pursuant to this section, of an agreement to return to the liquidator such assets together with income earned on assets previously disbursed as may be required to pay claims of secured creditors and claims falling within the priorities established in section 10-3-541 in accordance with such priorities; and in such case, no bond shall be required of any such association; and (e) A full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets, and any other matter as the court may direct. (3) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated at least equal to the claim payments made or to be made thereby for which such associations could assert a claim against the liquidator, and shall further provide that, if the assets available for disbursement from time to time do not equal or exceed the amount of such claim payments made or to be made by the association, then disbursements shall be in the amount of available assets. (4) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming, or guaranteeing policies or contracts of insurance under the statutes creating such associations. (5) Notice of the application referenced in subsection (1) of this section shall be given to the association in, and to the insurance departments of, each of the states having jurisdiction over Colorado Revised Statutes 2019 Page 195 of 943 Uncertified Printout any insurer affected by the liquidator's proposal. Any such notice shall be deemed to have been given when deposited in the United States certified mail, first class postage prepaid, at least thirty days prior to submission of such application to the court. Action on the application may be taken by the court if such notice has been given and if the liquidator's proposal complies with the requirements of paragraphs (a) and (b) of subsection (2) of this section. Source: L. 92: Entire part R&RE, p. 1467, § 14, effective July 1. 10-3-533.5. Sale of insolvent insurer as a going concern. (1) (a) The domiciliary receiver may apply to the court for permission to sell an insolvent domestic insurer as a going concern. If the court determines that the sale of the insurer as a going concern is in the best interest of the estate and that the sale will not diminish the value of the claims of shareholders and creditors, the court shall order that the insurer be discharged from all of its liabilities, that the outstanding shares of the insurer be cancelled, that for no additional consideration new shares of the insurer be issued in the name of the receiver, that the receiver be vested with title to the new shares, which shares shall be deemed validly issued, fully paid, and nonassessable pursuant to applicable law, and that the receiver be authorized to sell the shares, together with such state or federal income or other tax credits or deductions of the insurer as the receiver determines to be in the best interest of the estate. Upon confirmation of the sale by the court, the purchasers of the shares shall be vested with title to those shares, including any such tax credits of the insurer, free and clear of all claims and defenses. The proceeds from the sale of the shares shall become a part of the general assets of the estate in liquidation. (b) A sale under this section does not affect the rights and liabilities of the estate of the insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in the estate as fixed under section 10-3-541. No person is entitled to any priority or preference rights in the proceeds of the sale except as fixed under said section 10-3-541. (c) As used in this section, "shares" has the same meaning as set forth in section 7-101401 (31), C.R.S., and includes any secured party or other person or holder who has or claims to have any interest of any kind in any shares of the insurer. (2) The enumeration of the powers and authority of the domiciliary receiver in this section shall not be construed as a limitation upon the receiver, nor shall it exclude in any manner the right to do such other acts not specifically enumerated in this section or otherwise provided for as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation. (3) Nothing in this section shall be deemed a waiver of capitalization, surplus requirements, or any other condition of licensure imposed by this title for the issuance of a certificate of authority to do insurance business or for the change in control of a foreign or domestic insurer. (4) This section shall be liberally construed to accomplish its purpose to provide a more expeditious and effective procedure for marshaling the assets of the estate in order to realize the maximum amount possible from the sale of those assets and ensure that the purchasers receive clear and marketable titles. Source: L. 92: Entire part R&RE, p. 1469, § 14, effective July 1. L. 93: (1)(c) amended, p. 859, § 21, effective July 1, 1994. L. 2005: (1)(c) amended, p. 762, § 13, effective June 1. Colorado Revised Statutes 2019 Page 196 of 943 Uncertified Printout 10-3-534. Filing of claims. (1) Proof of all claims shall be filed with the liquidator in the form required by section 10-3-535 on or before the last day for filing specified in the notice required under section 10-3-521; except that proof of claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires. (2) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if the claimant's filing were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under the following circumstances: (a) A transfer to a creditor was avoided under sections 10-3-525 to 10-3-527, or was voluntarily surrendered under section 10-3-528, and the filing satisfies the conditions set forth in section 10-3-528; or (b) The valuation, under section 10-3-540, of security held by a secured creditor shows a deficiency which is filed within thirty days after the valuation. (3) The liquidator shall permit late-filed claims to share in distributions, whether past or future, as if they were not late, if such claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, subsequent to the last day for filing where such payments were made and expenses incurred as provided by law. Source: L. 92: Entire part R&RE, p. 1470, § 14, effective July 1. 10-3-535. Proof of claim. (1) Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable: (a) The particulars of the claim, including the consideration given for it; (b) The identity and amount of the security on the claim; (c) The payments made on the debt, if any; (d) That the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim; (e) Any right of priority of payment or other specific right asserted by the claimant; (f) A copy of the written instrument which is the foundation of the claim; and (g) The name and address of the claimant and of the attorney, if any, who represents the claimant. (2) No claim needs to be considered or allowed if it does not contain all the information specified in subsection (1) of this section which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included. (3) The liquidator may, at any time, request the claimant to present information or evidence supplementary to that required under subsection (1) of this section and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence. (4) No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion, needs to be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within Colorado Revised Statutes 2019 Page 197 of 943 Uncertified Printout the four-month period immediately preceding the filing of the petition needs be considered as evidence of liability or of the quantum of damages. (5) All claims of a guaranty association or foreign guaranty association shall be in such form and shall contain such substantiation as may be agreed to by the association and the liquidator. Source: L. 92: Entire part R&RE, p. 1471, § 14, effective July 1. 10-3-536. Special claims. (1) The claim of a third party which is contingent only on such party's first obtaining a judgment against the insured shall be considered and allowed as though there were no such contingency. (2) A claim may be allowed, even if contingent, if it is filed in accordance with section 10-3-534; and such claim may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation. (3) Claims that are due except for the passage of time shall be treated in the same manner as are absolute claims; except that such claims may be discounted at the legal rate of interest. (4) Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under section 10-3-512 or 10-3-517. Source: L. 92: Entire part R&RE, p. 1472, § 14, effective July 1. 10-3-537. Special provisions for third-party claims. (1) Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator. (2) Whether or not the third party files a claim, the insured may file a claim on the insured's own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty days after mailing of the notice required by section 10-3-521, whichever is later, the insured is an unexcused late filer. (3) The liquidator shall make recommendations to the court under section 10-3-541 for the allowance of an insured's claim under subsection (2) of this section after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action, and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim pending the outcome of litigation and negotiation with the insured. When appropriate, the liquidator shall reconsider the claim on the basis of additional information and amend the said recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in any recommendation as in its initial determination. The court may amend its allowance as it finds appropriate. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like property, based on the lesser of the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expense of defense, or the amount allowed on the claims by the court. After all claims are settled or barred, any sum Colorado Revised Statutes 2019 Page 198 of 943 Uncertified Printout remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection (3) shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator. (4) If several claims founded upon one policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in subsection (3) of this section. If any insured's claim is subsequently reduced under subsection (3) of this section, the amount thus freed shall be apportioned ratably among the claims which have been reduced under this subsection (4). (5) No claim may be presented under this section if it is or may be covered by any guaranty association or foreign guaranty association. Source: L. 92: Entire part R&RE, p. 1472, § 14, effective July 1. 10-3-538. Disputed claims. (1) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or the claimant's attorney by first class mail at the address shown in the proof of claim. Within sixty days after the mailing of the notice, the claimant may file objections with the liquidator. If no such filing is made, the claimant may not further object to the determination. (2) Whenever objections are filed with the liquidator and the liquidator does not alter the denial of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other persons directly affected, not less than ten days nor more than thirty days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee, who shall submit findings of fact along with a recommendation. Source: L. 92: Entire part R&RE, p. 1473, § 14, effective July 1. 10-3-539. Claims of surety. Whenever a creditor whose claim against an insurer is secured, in whole or in part, by the undertaking of another person fails to prove and file that claim, such other person may do so in the creditor's name and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that the other person discharges the undertaking; except that, in the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any distribution until the amount paid to the creditor on the undertaking plus the distributions paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by the creditor in trust for such other person. The term "other person", as used in this section, does not apply to a guaranty association or foreign guaranty association. Source: L. 92: Entire part R&RE, p. 1474, § 14, effective July 1. 10-3-540. Secured creditors' claims. (1) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct: Colorado Revised Statutes 2019 Page 199 of 943 Uncertified Printout (a) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor; or (b) By agreement, arbitration, compromise, or litigation between the creditor and the liquidator. (2) The determination shall be under the supervision and control of the court with due regard for the recommendation of the liquidator. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders the security to the liquidator, the entire claim shall be allowed as if unsecured. Source: L. 92: Entire part R&RE, p. 1474, § 14, effective July 1. 10-3-540.5. Qualified financial contracts - definitions. (1) Notwithstanding any other provision of this section, including any other provision of this section permitting the modification of contracts, or other law of a state, a person shall not be stayed or prohibited from exercising: (a) A contractual right to cause the termination, liquidation, acceleration, or close-out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of: (I) The insolvency, financial condition, or default of the insurer at any time, if the right is enforceable under applicable law other than this part 5; or (II) The commencement of a formal delinquency proceeding under this part 5; (b) Any right under a pledge, security, collateral, reimbursement, or guarantee agreement or arrangement or any other similar security agreement or arrangement or other credit enhancement relating to one or more netting agreements or qualified financial contracts; (c) (I) Subject to subparagraph (II) of this paragraph (c), any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the securities valuation office of the national association of insurance commissioners as eligible for netting. (II) No setoff shall be allowed after the commencement of a delinquency proceeding under part 4 of this article in favor of any person if: (A) The claim against the insurer is disallowed; (B) The claim against the insurer was purchased by or transferred to the person on or after the filing of the receivership petition or within one hundred twenty days preceding the filing of the receivership petition; (C) The obligation of the insurer is owed to an affiliate of the person or an entity other than the person, absent written assignment of the obligation made more than one hundred twenty days before the filing of the petition for receivership; (D) The obligation of the person is owed to an affiliate of the insurer or an entity other than the insurer, absent written assignment of the obligation made more than one hundred twenty days before the filing of the petition for receivership; Colorado Revised Statutes 2019 Page 200 of 943 Uncertified Printout (E) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; (F) The obligations between the person and the insurer arise out of transactions by which either the person or the insurer has assumed risks and obligations from the other party and then has ceded back to that party substantially the same risks and obligations. Notwithstanding this sub-subparagraph (F), the receiver may permit setoffs if, in the receiver's discretion, a setoff is appropriate because of specific circumstances relating to a transaction. (G) The obligation of the person arises out of any avoidance action taken by the receiver; or (H) The obligation of the insured is for the payment of earned premiums or retrospectively rated earned premiums. (2) (a) If a counterparty to a master netting agreement or a qualified financial contract with an insurer subject to a proceeding under this section terminates, liquidates, closes out, or accelerates the agreement or contract, damages shall be measured as of the date or dates of termination, liquidation, close-out, or acceleration. The amount of a claim for damages must be actual direct compensatory damages calculated in accordance with subsection (6) of this section. (b) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this section shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any provision in the netting agreement or qualified financial contract that provides that the nondefaulting party is not required to pay any net or settlement amount due to the defaulting party upon termination. Any limited two-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer. Any such property or amount is, except to the extent it is subject to one or more secondary liens or encumbrances or rights of netting or setoff, a general asset of the insurer. (3) In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this part 5, the receiver shall either: (a) Transfer to one party, other than an insurer subject to a proceeding under this part 5, all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including: (I) All rights and obligations of each party under each netting agreement and qualified financial contract; and (II) All property, including any guarantees or other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or (b) Transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in paragraph (a) of this subsection (3) with respect to the counterparty and any affiliate of the counterparty. (4) If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12 noon of the receiver's local time on the business day following the transfer. For purposes of this subsection Colorado Revised Statutes 2019 Page 201 of 943 Uncertified Printout (4), "business day" means a day other than a Saturday, Sunday, or any day on which either the New York stock exchange or the federal reserve bank of New York is closed. (5) Notwithstanding any other provision of this part 5, a receiver shall not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract, that is made before the commencement of a formal delinquency proceeding under this part 5. However, a transfer may be avoided under section 10-3-525 (1) if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors. (6) (a) In exercising the rights of disaffirmance or repudiation of a receiver with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either: (I) Disaffirm or repudiate all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or (II) Disaffirm or repudiate none of the netting agreements and qualified financial contracts referred to in subparagraph (I) of this paragraph (a) with respect to the person or any affiliate of the person. (b) Notwithstanding any other provision of this part 5, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation. The amount of the claim is the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims. (7) As used in this section: (a) "Contractual right" includes any right set forth in a rule or bylaw of a derivatives clearing organization, as defined in the federal "Commodity Exchange Act", 7 U.S.C. sec. 1 et seq., a multilateral clearing organization, as defined in the "Federal Deposit Insurance Corporation Improvement Act of 1991", Pub.L. 102-242, a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the federal "Commodity Exchange Act", a derivatives transaction execution facility registered under the federal "Commodity Exchange Act", or a board of trade as defined in the federal "Commodity Exchange Act", or in a resolution of the governing board of any of these entities and any right, whether or not evidenced in writing, arising under statutory or common law, under law merchant, or by reason of normal business practice. (b) (I) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, and any similar agreement that the Colorado Revised Statutes 2019 Page 202 of 943 Uncertified Printout commissioner determines by rule or order to be a qualified financial contract for the purposes of this section. (II) "Commodity contract" means: (A) A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal "Commodity Exchange Act", 7 U.S.C. sec. 1 et seq., or a board of trade outside the United States; (B) An agreement that is subject to regulation under section 19 of the federal "Commodity Exchange Act", 7 U.S.C. sec. 1 et seq., and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract; (C) An agreement or transaction that is subject to regulation under section 4c (b) of the federal "Commodity Exchange Act", 7 U.S.C. sec. 1 et seq., and that is commonly known to the commodities trade as a commodity option; (D) Any combination of the agreements or transactions referred to in this subparagraph (II); or (E) Any option to enter into an agreement or transaction referred to in this subparagraph (II). (III) "Forward contract", "repurchase agreement", "securities contract", and "swap agreement" have the meanings set forth in the "Federal Deposit Insurance Act", 12 U.S.C. sec. 1821 (e)(8)(D), as amended from time to time. (8) This section does not apply to persons who are affiliates of the insurer that is the subject of the proceeding. (9) All rights of counterparties under this part 5 apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account. Source: L. 2014: Entire section added, (HB 14-1315), ch. 295, p. 1212, § 2, effective August 6. 10-3-541. Priority of distribution - definitions. (1) The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is set forth in this section. Every claim in each class shall be paid in full, or adequate funds shall be retained for such payment, before the members of the next class receive any payment. No subclasses shall be established within any class. The order of distribution of claims shall be: (a) Class 1. The costs and expenses of administration during rehabilitation and liquidation, including but not limited to the following: (I) The actual and necessary costs of preserving or recovering the assets of the insurer; (II) Compensation for all authorized services rendered in the rehabilitation and liquidation; (III) Any necessary filing fees; (IV) The fees and mileage payable to witnesses; (V) Authorized reasonable attorney fees and fees for other professional services rendered in the rehabilitation and liquidation; and (VI) The administrative expenses of guaranty associations. Colorado Revised Statutes 2019 Page 203 of 943 Uncertified Printout (b) Class 2. All claims under policies including such claims of the federal or any state or local government including unearned premium claims, third-party claims, and all claims of a guaranty association or foreign guaranty association. That portion of any loss for which indemnification is provided by other benefits or advantages recovered by the claimant, other than benefits or advantages recovered or recoverable in discharge of familial obligation of support or by way of succession at death or as proceeds of life insurance, or as gratuities, shall not be included in this class. No payment by an employer to the employer's employee shall be treated as a gratuity. All claims under life insurance and annuities policies and deposits, whether for death proceeds, annuity proceeds, or values, shall be treated as class 2 claims. For the purpose of this paragraph (b), policies shall include those insurance company products that are authorized under the laws of this state as such laws existed on the date of the issuance of such policies or on the date of the entry of an order of liquidation. Notwithstanding the provisions of this paragraph (b), class 2 claims shall not include: (I) Claims under annuity and deposit contracts issued on or before August 15, 2000, however labeled, including labels such as annuity, deposit, financial guarantee, funding agreement, or guaranteed investment contract, unless the contract is: (A) Issued to, or owned by, an individual or is otherwise an annuity issued in connection with and for the purpose of funding structured settlements of liability; or (B) Issued to, for the benefit of, or in connection with, a specific employee benefit plan or governmental lottery; (II) Claims where the risk is not borne by the insurer, such as the uninsured portion of: (A) A minimum premium group insurance plan; (B) A stop-loss group insurance plan; or (C) An administrative-services only contract and the related uninsured plan liabilities; (III) Claims under an unallocated annuity contract issued to an employee benefit plan protected under the federal pension benefit guaranty corporation; and (IV) Claims for benefits which are exclusively payable or determined by a separate account required by the terms of such contract to be maintained by the insurer or a separate entity. (c) Class 3. Claims of the federal government, except those described in paragraph (b) of this subsection (1). (d) Class 4. Reasonable compensation to employees for services performed to the extent that they do not exceed two months of monetary compensation and represent payment for services performed within the one-year period immediately preceding the filing of the petition for liquidation. Principal officers and directors shall not be entitled to the benefit of this priority except as otherwise approved by the liquidator and the court. Such priority shall be in lieu of any other similar priority which may be authorized by law as to wages or compensation of employees. (e) Class 5. Claims of any state or local government except those under paragraph (b) of this subsection (1). Claims in this paragraph (e), including those of any governmental body for a penalty or forfeiture, shall be allowed only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose and for the reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to class 7. (f) Class 6. Claims filed late and any other claims other than claims described in paragraph (h) of this subsection (1). Colorado Revised Statutes 2019 Page 204 of 943 Uncertified Printout (g) Class 7. Surplus or contribution notes or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law. (h) Class 8. Claims of shareholders or other owners in their capacity as shareholders. (2) (a) (Deleted by amendment, L. 2003, p. 2045, § 2, effective May 22, 2003.) (b) Every claim under a separate account contract providing, in effect, that the assets in the separate account shall not be chargeable with liabilities arising out of any other business of the insurer shall be satisfied out of the assets in the separate account equal to the reserves and other contract liabilities maintained in such account for such contract. To the extent, if any, that the separate account assets are not sufficient to discharge such claims due to fraud, error, or other malfeasance on the part of the insurer or if unsatisfied claims arise from a contractual guarantee made to a contract holder by the insurer's general account, such unsatisfied claims shall be treated as a class 2 claim against the insurer's estate. Any such class 2 claim shall be subject to the applicable exceptions for this class, excluding the exception for separate accounts under subparagraph (IV) of paragraph (b) of subsection (1) of this section. (3) As used in this section: (a) "Insurer's estate" means the general assets of such insurer less any assets held in separate accounts that, pursuant to section 10-7-402, are not chargeable with liabilities arising out of any other business of the insurer. To the extent, if any, assets maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as part of the insurer's estate. (b) "Separate account contract" means any life policy or contract, annuity contract, funding agreement, or guaranteed investment contract providing for the allocation of amounts received in connection with such policy, contract, or agreement to a separate account authorized by section 10-7-402. Source: L. 92: (1)(c) amended, p. 1552, § 48, effective May 20; entire part R&RE, p. 1474, § 14, effective July 1. L. 96: Entire section amended, p. 174, § 1, effective April 8. L. 97: (1)(b)(I)(A) amended and (2) added, p. 360, § 1, effective August 6. L. 2000: IP(1)(b) and IP(1)(b)(I) amended, p. 1733, § 6, effective August 15. L. 2003: (2)(a) amended and (3) added, p. 2045, § 2, effective May 22. Editor's note: Although the effective date for the repeal and reenactment of this part 5 was July 1, 1992, the act further amending subsection (1)(c) was effective May 20, 1992. 10-3-542. Liquidator's recommendations to the court. (1) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as deemed necessary. The liquidator may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court except where the liquidator is required by law to accept claims as settled by any person or organization, including any guaranty association or foreign guaranty association. Unresolved disputes shall be determined under section 10-3-538. As soon as practicable, the liquidator shall present to the court a report of the claims against the insurer with the liquidator's recommendations. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons Colorado Revised Statutes 2019 Page 205 of 943 Uncertified Printout to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment value and the amounts owed. (2) The court may approve, disapprove, or modify the liquidator's report on claims. Claims allowed in any report not modified by the court within a period of sixty days after submission by the liquidator shall be treated by the liquidator as allowed claims, subject thereafter to later modification or to rulings made by the court pursuant to section 10-3-538. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits. Source: L. 92: Entire part R&RE, p. 1476, § 14, effective July 1. 10-3-543. Distribution of assets. Under the direction of the court, the liquidator shall pay distributions in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court. Source: L. 92: Entire part R&RE, p. 1477, § 14, effective July 1. 10-3-544. Unclaimed and withheld funds. (1) All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member, or other person who is unknown or cannot be found, shall be deposited with the state treasurer and shall be paid, without interest, except in accordance with section 10-3-541, to the person entitled thereto or such person's legal representative upon proof satisfactory to the state treasurer of the person's right thereto. Any amount on deposit not claimed within six years after the date of discharge of the liquidator shall be deemed to have been abandoned and shall escheat, without formal escheat proceedings, to the state and shall be deposited in the general fund. (2) All funds withheld under section 10-3-537 and not distributed shall, upon discharge of the liquidator, be deposited with the state treasurer and paid in accordance with section 10-3541. Any sums remaining which, under section 10-3-541, would revert to the undistributed assets of the insurer shall be transferred to the state treasurer and become the property of the state under subsection (1) of this section unless the commissioner in the commissioner's discretion petitions the court to reopen the liquidation under section 10-3-546. Source: L. 92: Entire part R&RE, p. 1477, § 14, effective July 1. 10-3-545. Termination of proceedings. (1) When all assets justifying the expense of collection and distribution have been collected and distributed under this part 5, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders, including an order to transfer any remaining funds that are uneconomic to distribute, as may be deemed appropriate. Colorado Revised Statutes 2019 Page 206 of 943 Uncertified Printout (2) Any other person may apply to the court at any time for an order under subsection (1) of this section. If the application is denied, the applicant shall pay the costs and expenses of the liquidator in resisting the application, including a reasonable attorney fee. Source: L. 92: Entire part R&RE, p. 1477, § 14, effective July 1. 10-3-546. Reopening liquidation. After the liquidation proceeding has been terminated and the liquidator discharged, the commissioner or other interested party may at any time petition the district court in and for the city and county of Denver to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall so order. Source: L. 92: Entire part R&RE, p. 1478, § 14, effective July 1. 10-3-547. Disposition of records during and after termination of liquidation. Whenever it appears to the commissioner that the records of any insurer in process of liquidation or completely liquidated are no longer useful, the commissioner may recommend to the court and the court shall direct what records should be retained for future reference and what should be destroyed. Source: L. 92: Entire part R&RE, p. 1478, § 14, effective July 1. 10-3-548. External audit of receiver's books. The district court in and for the city and county of Denver may, as it deems desirable, cause audits to be made of the books of the commissioner relating to any receivership established under this part 5, and a report of each such audit shall be filed with the commissioner and with the court. The books, records, and other documents of the receivership shall be made available to the auditor at any time without notice. The expense of each audit shall be considered a cost of administration of the receivership. Source: L. 92: Entire part R&RE, p. 1478, § 14, effective July 1. 10-3-549. Conservation of property of foreign or alien insurers found in this state. (1) If a domiciliary liquidator has not been appointed, the commissioner may apply to the district court in and for the city and county of Denver by verified petition for an order directing the commissioner to act as conservator to conserve the property of an alien insurer not domiciled in this state or a foreign insurer on any one or more of the following grounds: (a) Any of the grounds set forth in section 10-3-511; (b) That any of the insurer's property has been sequestered by official action in its domiciliary state or in any other state; (c) That enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent; (d) That its certificate of authority to do business in this state has been revoked or that none was ever issued and that there are residents of this state with outstanding claims or outstanding policies. Colorado Revised Statutes 2019 Page 207 of 943 Uncertified Printout (2) When an order is sought under subsection (1) of this section, the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances. (3) The court may issue the order in whatever terms it deems appropriate. The filing or recording of the order with the clerk of the said court or with the recorder of deeds of the county in which the principal business of the company is located shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded with that recorder of deeds. (4) The conservator may at any time petition for, and the court may grant, an order under section 10-3-550 to liquidate assets of a foreign or alien insurer under conservation, or, if appropriate, for appointment as ancillary receiver under section 10-3-552. (5) The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon motion of any interested party. If such motion by any person other than the conservator is denied, all costs of such motion shall be assessed against the movant. Source: L. 92: Entire part R&RE, p. 1478, § 14, effective July 1. 10-3-550. Liquidation of property of foreign or alien insurers found in this state. (1) If no domiciliary receiver has been appointed, the commissioner may apply to the district court in and for the city and county of Denver by verified petition for an order directing the commissioner to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state, on any of the grounds specified in section 10-3-511 or 10-3-516 or any of the grounds specified in section 10-3-549 (1)(b) to (1)(d). (2) When an order is sought under subsection (1) of this section, the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances. (3) If it appears to the court that the best interests of creditors, policyholders, and the public so require, the court may issue an order to liquidate in whatever terms it deems appropriate. The filing or recording of the order with the clerk of the said court or with the recorder of deeds of the county in which the principal business of the company is located or the county in which its principal office or place of business is located shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded with such recorder of deeds. (4) If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator under this section shall thereafter act as ancillary receiver under section 10-3-552. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator under this section may petition the court for permission to act as ancillary receiver under section 10-3-552. (5) On the same grounds as are specified in subsection (1) of this section, the commissioner may petition any appropriate federal district court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise Colorado Revised Statutes 2019 Page 208 of 943 Uncertified Printout jurisdiction, or over any lesser part thereof that the commissioner deems desirable for the protection of the policyholders and creditors in this state. (6) The court may order the commissioner, when the commissioner has liquidated the assets of a foreign or alien insurer under this section, to pay claims of residents of this state against the insurer under such rules governing the liquidation of insurers under this part 5 as are otherwise compatible with the provisions of this section. Source: L. 92: Entire part R&RE, p. 1479, § 14, effective July 1. 10-3-551. Domiciliary liquidators in other states. (1) The domiciliary liquidator of an insurer domiciled in a reciprocal state shall be vested, except as to special deposits and security on secured claims under section 10-3-552 (3), by operation of law with the title to all of the assets, property, contracts, rights of action, and agents' balances and all of the books, accounts, and other records of the insurer located in this state. The date of vesting shall be the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state; otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover balances due from agents and to obtain possession of the books, accounts, and other records of the insurer located in this state, and shall also, subject to the provisions of section 103-552, have the right to recover all other assets of the insurer located in this state. (2) If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the commissioner of this state shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books, accounts, and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domicile. The commissioner of this state may petition for a conservation or liquidation order under section 10-3-549 or 10-3-550 or for an ancillary receivership under section 10-3-552, or, after approval by the district court in and for the city and county of Denver, may transfer title to the domiciliary liquidator as the interests of justice and the equitable distribution of the assets require. (3) Claimants residing in this state may file claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. Such claims shall be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceedings. Source: L. 92: Entire part R&RE, p. 1480, § 14, effective July 1. 10-3-552. Ancillary formal proceedings. (1) If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the commissioner may file a petition with the district court in and for the city and county of Denver requesting appointment as ancillary receiver in this state: (a) If the commissioner finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; or (b) If the protection of creditors or policyholders in this state so requires. (2) The court may issue an order appointing an ancillary receiver in whatever terms it deems appropriate. The filing or recording of the order with a recorder of deeds in this state Colorado Revised Statutes 2019 Page 209 of 943 Uncertified Printout imparts the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded with such recorder of deeds. (3) When a domiciliary liquidator has been appointed in a reciprocal state, then the ancillary receiver appointed in this state may, whenever necessary, aid and assist the domiciliary liquidator in recovering assets of the insurer located in this state. The ancillary receiver shall, as soon as is practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. The ancillary receiver shall also promptly transfer all remaining assets, books, accounts, and records to the domiciliary liquidator. Subject to this section, the ancillary receiver and such ancillary receiver's deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state. (4) When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts, and other records in their respective states, rights, duties, and powers corresponding to those provided in subsection (3) of this section for ancillary receivers appointed in this state. Source: L. 92: Entire part R&RE, p. 1481, § 14, effective July 1. 10-3-553. Ancillary summary proceedings. The commissioner, in the commissioner's sole discretion, may institute proceedings under sections 10-3-509 and 10-3-510 at the request of the insurance department of the domiciliary state of any foreign or alien insurer having property located in this state. Source: L. 92: Entire part R&RE, p. 1482, § 14, effective July 1. 10-3-554. Claims of nonresidents against insurers domiciled in this state. (1) In a liquidation proceeding commenced in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states that are not reciprocal states must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, if a claim filing procedure is established in the ancillary proceeding, or with the domiciliary liquidator. Such claims shall be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding. (2) Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in this part 5, or in ancillary proceedings, if any, in the reciprocal states if a claim filing procedure is established in the ancillary proceeding. If notice of the claims and opportunity to appear and be heard is afforded the domiciliary liquidator of this state as provided in section 10-3-555 (2) with respect to ancillary proceedings, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority against special deposits or other security located in such ancillary states, but shall not be conclusive with respect to priorities against general assets under section 10-3-541. Source: L. 92: Entire part R&RE, p. 1482, § 14, effective July 1. Colorado Revised Statutes 2019 Page 210 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-3-505 as it existed prior to 1992. 10-3-555. Claims of residents against insurers domiciled in reciprocal states. (1) Promptly after the appointment of the commissioner as ancillary receiver for an insurer not domiciled in this state, the commissioner shall determine whether there are claimants residing in this state who are not protected by guaranty funds and, if so, whether the protection of such claimants requires the establishing of a claim filing procedure in the ancillary proceeding. If a claim filing procedure is established, claimants against the insurer who reside within this state may file claims either with the ancillary receiver, if any, in this state, or with the domiciliary liquidator. Such claims shall be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding. (2) Claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of that state, or in ancillary proceedings, if any, in this state if a claim filing procedure is established in such ancillary proceeding. If a claimant elects to prove such a claim in this state, the claimant shall file the claim with the liquidator in the manner provided in sections 10-3-534 and 10-3-535. The ancillary receiver shall make a recommendation to the court as under section 10-3-542 and shall also arrange a date for hearing if necessary under section 10-3-538 and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service, at least forty days prior to the date set for hearing. If the domiciliary liquidator, within thirty days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of the domiciliary liquidator's intention to contest the claim, the domiciliary liquidator shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. (3) The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state. Source: L. 92: Entire part R&RE, p. 1483, § 14, effective July 1. Editor's note: This section is similar to former § 10-3-506 as it existed prior to 1992. 10-3-556. Attachment, garnishment, and levy of execution. During the pendency in this or any other state of a liquidation proceeding, whether called by that name or not, no action or proceeding in the nature of an attachment, garnishment, or levy of execution shall be commenced or maintained in this state against the delinquent insurer or its assets. Source: L. 92: Entire part R&RE, p. 1483, § 14, effective July 1. Editor's note: This section is similar to former § 10-3-510 as it existed prior to 1992. 10-3-557. Interstate priorities. (1) In a liquidation proceeding in this state involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states Colorado Revised Statutes 2019 Page 211 of 943 Uncertified Printout shall be given equal priority of payment from general assets regardless of where such assets are located. (2) The owners of special deposit claims against an insurer for which a liquidator is appointed in this or any other state shall be given priority against the special deposits in accordance with the statutes governing the creation and maintenance of the deposits. If there is a deficiency in any deposit, so that the claims secured by it are not fully discharged from it, the claimants may share in the general assets, but the sharing shall be deferred until general creditors, as well as all claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. (3) The owner of a secured claim against an insurer for which a liquidator has been appointed in this or any other state may surrender the security and file the claim as a general creditor. Alternatively, the claim may be discharged by resort to the security in accordance with section 10-3-540, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. Source: L. 92: Entire part R&RE, p. 1484, § 14, effective July 1. 10-3-558. Subordination of claims for noncooperation. If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this state any assets within such receiver's control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be placed in the class 7 as defined in section 10-3-541 (1)(g). Source: L. 92: Entire part R&RE, p. 1484, § 14, effective July 1. 10-3-559. Severability. If any provision of this part 5 or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this part 5 and the application of such provision to other persons or circumstances shall not be affected thereby. Source: L. 92: Entire part R&RE, p. 1484, § 14, effective July 1. PART 6 EXCHANGE OF INSURANCE SECURITIES ACT 10-3-601. Short title. This part 6 shall be known and may be cited as the "Colorado Exchange of Insurance Securities Act". Source: L. 69: p. 529, § 1. C.R.S. 1963: § 72-27-1. 10-3-602. Exchange of securities. (1) Any stock insurance company organized under the laws of this state, referred to in this part 6 as a "domestic company", may adopt a plan of Colorado Revised Statutes 2019 Page 212 of 943 Uncertified Printout exchange providing for the exchange by its shareholders of their stock in the domestic company for: (a) Shares of stock issued by an acquiring corporation; or (b) Other securities issued by an acquiring corporation; or (c) Cash; or (d) Other consideration; or (e) Any combination of such stock, other securities, cash, or other consideration. Source: L. 69: p. 529, § 2. C.R.S. 1963: § 72-27-2. 10-3-603. Acquiring corporation - definition. (1) As used in this part 6, "acquiring corporation" means: (a) Any stock insurance company organized under the laws of this state, other than the domestic company whose shareholders are to exchange their stock under a plan of exchange, as provided in this part 6; or (b) Any stock corporation organized under the "Colorado Corporation Code" which is not an insurance company; or (c) Any stock corporation which is not an insurance company and which was organized under any general law of this state prior to the effective date of the "Colorado Corporation Code" (January 1, 1959) and to which such code is applicable; or (d) Any stock corporation organized under the laws of any state of the United States, whether or not an insurance company. Source: L. 69: p. 529, § 3. C.R.S. 1963: § 72-27-3. Editor's note: The "Colorado Corporation Code", articles 1 to 10 of title 7, referred to in subsection (1)(b) and (1)(c), was repealed, effective July 1, 1994, and replaced by the "Colorado Business Corporation Act", articles 101 to 117 of title 7. 10-3-604. Procedure for exchange. (1) Any domestic company may adopt a plan of exchange with any acquiring corporation providing for the exchange of the outstanding stock of the domestic company for shares of stock or other securities issued by the acquiring corporation, or cash, or other consideration, or any combination thereof, in the following manner: (a) The boards of directors of the domestic company and of the acquiring corporation, by resolutions approved by a majority of the whole of each such board, shall adopt a plan of exchange which shall set forth the terms and conditions of the exchange and the mode of carrying the same into effect and such other provisions with respect to the exchange as may be deemed necessary or desirable. (b) The domestic company and the acquiring corporation shall submit to the commissioner three copies of the plan of exchange certified by an officer of each as having been adopted in accordance with paragraph (a) of this subsection (1). Such copies of the plan of exchange shall be accompanied by: (I) The annual statement of the domestic company for its last preceding calendar year prepared pursuant to section 10-3-208; Colorado Revised Statutes 2019 Page 213 of 943 Uncertified Printout (II) Fully audited financial information as to the earnings and financial condition of the acquiring corporation for the preceding five fiscal years of each such acquiring corporation, or for lesser period as such acquiring corporation and any predecessors thereof have been in existence, and similar unaudited information as of a date not earlier than ninety days prior to the date of filing the statement; (III) A pro forma financial statement of each acquiring corporation based on the assumption that the plan of exchange was effective as proposed at the end of the last preceding calendar year of the domestic company; (IV) An estimate of expenses already incurred and expenses expected to be incurred in connection with the proposed plan of exchange; (V) A written statement which sets forth for each corporation the proposed changes, if any, in management policies and the identity of officers and directors of the domestic company and of the acquiring corporation which are initially contemplated should the plan of exchange be effective as proposed; and (VI) If the plan of exchange is submitted to the commissioner after March 31 of any year, a balance sheet of the domestic company, as of a date within ninety days prior to the date the plan is submitted, a summary of operations of the domestic company for the period between the preceding December 31 and the date of such balance sheet, and financial statements of each acquiring corporation based on the assumption that the plan of exchange was effective as proposed on the date of such balance sheet. (c) The commissioner shall hold a hearing upon the fairness of: The terms, conditions, and provisions of the plan of exchange; and the proposed exchange of stock or other securities of the acquiring corporation, or cash, or other consideration, or any combination thereof, for the stock of the domestic company, at which hearing the policyholders and the shareholders of both the domestic company and the acquiring corporation and any other interested party shall have the right to appear and to become party to the proceeding. The commissioner shall require the domestic company and the acquiring corporation to produce such evidence as he deems necessary to establish the fairness to be ascertained at the hearing, including in any event evidence concerning the valuation of the respective companies and the method utilized by the management of each corporation to accomplish such valuation, inclusive of the value established with respect to the stock of the domestic company which is proposed to be exchanged, as well as the value of the stock, securities, and consideration, other than cash, to be offered by the acquiring corporation in such exchange. (d) Such hearing shall be commenced not less than twenty days after the date on which the plan of exchange is presented to the commissioner. The hearing shall be held in the city and county of Denver at such place, date, and time as the commissioner specifies. Notice of the hearing shall be published in a newspaper of general circulation in the city wherein is located the principal office of the domestic company and of the acquiring corporation, and in the city and county of Denver, once a week for two successive weeks. Written notice of the hearing shall be mailed at least ten days prior to the hearing by the domestic company and by the acquiring corporation to all of their respective shareholders. All expenses of publication shall be borne by the domestic company or the acquiring corporation, or both, as specified in the plan of exchange. The hearing shall be conducted in accordance with the provisions of section 24-4-105, C.R.S. (e) The commissioner shall issue an order approving the plan of exchange as delivered to him by the domestic company and the acquiring corporation and such modifications therein as a Colorado Revised Statutes 2019 Page 214 of 943 Uncertified Printout majority of the whole board of directors of each such corporation approves if he finds: That the plan, including all such modifications, if effected, will not tend adversely to affect the financial stability or management of the domestic company or the general capacity or intention to continue the safe and prudent transaction of the insurance business of the domestic company or of the acquiring corporation if it is a domestic insurance company; that the interests of the policyholders and shareholders of the domestic company and, if the acquiring corporation is a domestic insurance company, the policyholders of the acquiring corporation are adequately protected; that the fulfillment of the plan will not affect either the contractual obligations of the domestic company and of the acquiring corporation, if it is a domestic insurance company, to its policyholders or the ability and tendency of either to render service to its policyholders in the future; that the effect of the merger or other acquisition of control would not substantially lessen competition in the business of providing insurance in this state or tend to create a monopoly therein; that all plans or proposals which the acquiring corporation has to liquidate the domestic company or to sell its assets, consolidate or merge it with any person, or make any other material change in its business or corporate structure or management have been fully disclosed and are not unfair or unreasonable to policyholders of the domestic company and are in the public interest; that the competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would be in the interest of the policyholders of the domestic company and of the public to permit the merger or other acquisition of control; and that the terms and conditions of the plan of exchange and the proposed issuance and exchange are otherwise fair and reasonable. (f) The order of the commissioner approving or disapproving the plan of exchange shall be filed in his office within sixty days after the date the plan of exchange is presented to him. Upon filing such order, the commissioner shall send a copy thereof to each party to the proceeding, such copy to be sent to each such party by certified mail directed to such party at the address of such party as shown by the record of the hearing. Any final order of the commissioner approving or disapproving a plan of exchange pursuant to this section shall be subject to judicial review by the court of appeals pursuant to section 24-4-106 (11), C.R.S. (g) The plan of exchange as approved by the commissioner shall be submitted to a vote of the shareholders of the domestic company at an annual or special meeting of the shareholders. Notice of the submission of the plan to the shareholders shall be included in the notice of the meeting. The plan shall be approved by the shareholders of the domestic company upon receiving the affirmative votes of the holders of shares of the domestic company having at least two-thirds of the total voting power of the outstanding shares of the domestic company. Notwithstanding shareholder approval of the plan of exchange, and at any time prior to the filing of the certificate setting forth the plan of exchange by the commissioner pursuant to section 103-605, the plan of exchange may be abandoned pursuant to a provision for such abandonment, if any, contained in the plan of exchange. (h) Within ten days after the plan of exchange is approved by the shareholders of the domestic company, a written notice of the approval of the plan of exchange shall be mailed or delivered personally to each shareholder of record of such company who was entitled to vote thereon. The domestic company shall thereafter file with the commissioner an affidavit of the secretary or an assistant secretary of such company, or of an officer of the transfer agent of such company, that such notice was given. Colorado Revised Statutes 2019 Page 215 of 943 Uncertified Printout (i) Any shareholder of the domestic company owning shares not voted in favor of such plan at the meeting at which the plan was approved by the shareholders of the domestic company may object in writing to the plan and demand payment, should the plan become effective, of the fair value of any of such shares, as of the day on which the plan of exchange was approved by the shareholders of the domestic company pursuant to paragraph (g) of this subsection (1). Such objection and demand shall be received, together with the certificate representing the shares with respect to which objection and demand have been made, for notation thereon that such objection and demand have been made, by the domestic company or its transfer agent within thirty days after the date of said meeting of shareholders. No such objection and demand shall pertain to any shares which were voted in favor of the plan. No such objection and demand may be withdrawn unless the domestic company, by a duly authorized officer, consents thereto in writing. (j) Upon the plan of exchange becoming effective, the holder of any shares, with respect to which such objection and demand have been made and certificates for which have been delivered to the domestic company or its transfer agent for notation, or any transferee thereof, shall cease to be a shareholder of the domestic company with respect to such shares and shall have no rights with respect to such shares, except the right to receive payment therefor in accordance with the provisions of paragraph (k) of this subsection (1). Every shareholder failing to make objection and demand accompanied by certificates representing the shares with respect to which such objection and demand have been made or withdrawing such objection and demand as provided in paragraph (i) of this subsection (1) shall be conclusively presumed to have assented to, and to have agreed to be bound by, the plan of exchange in accordance with its terms. (k) Within forty-five days after the date of the meeting of shareholders of the domestic company at which the plan of exchange was approved by such shareholders, the domestic company, or, if the plan of exchange so specifies, the acquiring corporation, shall mail a written offer to each holder of record of shares with respect to which an objection and demand have been made, as provided in paragraph (i) of this subsection (1), to pay for such shares a price per share deemed by such corporation to be the fair value thereof as of the date of such meeting. The form of written offer to be used, including the price per share, shall first be submitted to and approved by the commissioner. If such offer is accepted in writing by such holder, such corporation shall pay such holder, within forty-five days after the date of the plan of exchange becoming effective, such price upon the surrender of the certificate representing such shares. (l) If, within thirty days after the date of the mailing of such written offer, the domestic company or the acquiring corporation, as the case may be, and a shareholder do not agree on the price, such corporation or the shareholder may, within ninety days after the date of the mailing of such written offer, file a petition in any court of competent jurisdiction in the county where the registered office of the domestic company is located asking for a finding and determination of the fair value of such shares as of the date of the meeting of shareholders of the domestic company at which the plan of exchange was approved by such shareholders; and payment of the fair value thereof shall be made by the domestic company or, if the plan of exchange so specifies, the acquiring corporation within sixty days after the entry of the judgment or order determining such fair value, upon the surrender of the certificate representing such shares. (m) All shares acquired by the domestic company, upon payment of the value therefor, shall be canceled by the board of directors of the domestic company, upon the plan of exchange becoming effective, or at any time thereafter in the manner provided in section 7-106-302 (2)(b), Colorado Revised Statutes 2019 Page 216 of 943 Uncertified Printout C.R.S., and any statement of cancellation made pursuant to said section shall first be filed with the commissioner prior to filing thereof with the secretary of state. If the commissioner finds such statement of cancellation to have been lawfully executed, and to be in due legal form and not in conflict with the provisions of law governing the domestic company, such statement of cancellation shall be filed with the secretary of state. (n) If the plan of exchange does not become effective, the right of shareholders or transferees to be paid the fair value of their shares under this subsection (1) shall cease, and their status shall be the same as that of shareholders who voted in favor of the plan. If a shareholder or his transferee, with respect to any share for which objection and demand have been made: Withdraws such objection and demand in the manner provided by this subsection (1), or fails to submit a certificate at the time and in the manner required by this subsection (1), or does not file a petition for the determination of fair value within the time and in the manner provided in this subsection (1) and neither the domestic company nor the acquiring corporation files a petition for such determination, or is adjudged by a court of competent jurisdiction not to be entitled to the relief provided by this subsection (1), then the right of the shareholder or his transferee to be paid the fair value of such share shall cease, and his status with respect to such share shall be the same as that of a shareholder who voted in favor of the plan. Source: L. 69: p. 529, § 4. C.R.S. 1963: § 72-27-4. L. 77: (1)(b) R&RE, p. 508, § 1, and (1)(e) amended, p. 509, § 2, effective June 3. L. 92: (1)(f) amended, p. 1553, § 49, effective May 20. L. 93: (1)(m) amended, p. 859, § 22, effective July 1, 1994. Cross references: For annual financial statements, see § 10-3-208. 10-3-605. Filing plan of exchange. Not earlier than thirty-one days after the date of the meeting of shareholders of the domestic company at which the plan of exchange was approved by such shareholders, a certificate setting forth the plan of exchange, the manner of the approval thereof by the directors of the acquiring corporation and the domestic company, and the manner of its approval by the shareholders of the domestic company and the vote by which approved by the shareholders of the domestic company, or setting forth that the plan of exchange has been abandoned, shall be signed on behalf of each such corporation by its president or a vicepresident and shall then be presented in triplicate to the commissioner at his office for filing. The commissioner shall file one copy of such certificate in his office and shall deliver copies bearing the date and time of filing endorsed thereon to the domestic company and the acquiring corporation. Upon the filing of such certificate, unless it sets forth that the plan of exchange has been abandoned, the plan of exchange and the issuance and exchange provided for therein shall become effective, unless a later date and time is specified in the plan of exchange, in which event the plan of exchange and the issuance and exchange provided for therein shall become effective upon such later date and time. Source: L. 69: p. 533, § 5. C.R.S. 1963: § 72-27-5. 10-3-606. Effect of exchange. (1) Upon the plan of exchange becoming effective, the exchange provided for therein shall be deemed to have been consummated, each shareholder of the domestic company shall cease to be a shareholder of such company, the ownership of all Colorado Revised Statutes 2019 Page 217 of 943 Uncertified Printout shares of the issued and outstanding stock of the domestic company, except shares payment of the value of which is required to be made by the domestic company or the acquiring corporation pursuant to section 10-3-604, shall vest in the acquiring corporation automatically without any physical transfer or deposit of certificates representing such shares, and all shares payment of the value of which is required to be made by the domestic company or the acquiring corporation pursuant to section 10-3-604, shall be deemed no longer outstanding shares of the domestic company. (2) Certificates representing shares of the domestic company prior to the plan of exchange becoming effective, except certificates representing shares payment of the value of which is required to be made pursuant to section 10-3-604, and bearing a notation thereon that objection and demand pursuant to such section have been made, shall, after the plan of exchange becomes effective, represent: Shares of the issued and outstanding capital stock or other securities issued by the acquiring corporation; and the right, if any, to receive such cash or other consideration upon such terms as are specified in the plan of exchange; but the plan of exchange may specify that all certificates representing shares of stock of the domestic company, except certificates representing shares payment of the value of which is required to be made pursuant to section 10-3-604, shall, after the plan of exchange becomes effective, represent only the right to receive shares of stock or other securities issued by the acquiring corporation, or cash, or other consideration, or any combination thereof, upon such terms as are specified in the plan of exchange. Certificates representing shares of the domestic company with respect to which an objection and demand have been made pursuant to section 10-3-604, and bearing a notation thereon that such objection and demand have been made, shall, after the plan of exchange becomes effective, represent only the right to receive payment therefor, subject to the provisions of this part 6. Source: L. 69: p. 533, § 6. C.R.S. 1963: § 72-27-6. 10-3-607. Authorized insurance business and regulatory authority. Nothing contained in this part 6 shall be construed to authorize any insurance company to engage in any kind of insurance business not authorized by its articles of incorporation or to authorize any acquiring corporation which is not an insurance company to engage directly in the business of insurance. Source: L. 69: p. 534, § 7. C.R.S. 1963: § 72-27-7. 10-3-608. Domestic company and acquiring corporation separate and distinct entities. The domestic company and the acquiring corporation shall in all respects be regarded in law as separate and distinct corporations, with neither of such corporations having any liability to the creditors, policyholders, if any, or shareholders of the other, any acts or omissions of the officers, directors, or shareholders of either or both of such corporations notwithstanding. Source: L. 69: p. 534, § 8. C.R.S. 1963: § 72-27-8. 10-3-609. Examination. After any acquiring corporation becomes the owner of all the outstanding shares of a domestic company pursuant to a plan of exchange consummated under Colorado Revised Statutes 2019 Page 218 of 943 Uncertified Printout the provisions of this part 6, the commissioner may, in connection with any examination of the domestic company, examine all records and documents of the acquiring corporation pertaining to the relationships and transactions of the domestic company with the acquiring corporation or its subsidiaries or affiliates. If the acquiring corporation is organized under the laws of any state other than Colorado, the commissioner may, as a condition of approving the plan of exchange, require such acquiring corporation to file a written consent to examination of its records and documents as provided in this section. Source: L. 69: p. 534, § 9. C.R.S. 1963: § 72-27-9. 10-3-610. Application of this part 6. Nothing contained in this part 6 shall be construed to prohibit the consummation of a plan of exchange of the kind described in section 10-3-602, without compliance with the provisions of this part 6, and, if any such plan of exchange is consummated other than in compliance with this part 6, none of the provisions of sections 10-3604 to 10-3-606 shall be applicable to such plan of exchange. Source: L. 69: p. 534, § 10. C.R.S. 1963: § 72-27-10. PART 7 CREDIT FOR REINSURANCE MODEL ACT Editor's note: This part 7 was numbered as article 31 of chapter 72, C.R.S. 1963. It was repealed and reenacted in 2014, effective January 1, 2015, resulting in the addition, relocation, or elimination of sections as well as subject matter. For amendments to this part 7 prior to 2015, consult the 2014 Colorado Revised Statutes and the Colorado statutory research explanatory note beginning on page vii in the front of this volume. 10-3-701. Purpose. The purpose of this part 7 is to protect the interest of insureds, claimants, ceding insurers, assuming insurers, and the public generally. The general assembly hereby declares its intent is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom they owe obligations. In furtherance of that state interest, the general assembly hereby provides a mandate that upon the insolvency of a non-United States insurer or reinsurer that provides security to fund its United States obligations in accordance with this part 7, the assets representing the security must be maintained in the United States, claims must be filed with and valued by the state insurance commissioner with regulatory oversight, and the assets must be distributed in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic United States insurance companies. The general assembly declares that the matters contained in this part 7 are fundamental to the business of insurance in accordance with 15 U.S.C. secs. 1011 and 1012. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1201, § 1, effective January 1, 2015. Colorado Revised Statutes 2019 Page 219 of 943 Uncertified Printout Cross references: For conditions necessary for reinsurance, see § 10-3-118. 10-3-702. Credit allowed to a domestic ceding insurer - rules - definition. (1) Credit for reinsurance shall be allowed to a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subsection (2), (3), (4), (5), (6), or (7) of this section. Credit shall be allowed under subsection (2), (3), or (4) of this section only as respects cessions of those kinds or classes of business that the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under subsection (4) or (5) of this section only if the applicable requirements of subsection (8) of this section have been satisfied. (2) Credit shall be allowed to a domestic ceding insurer when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state. (3) Credit shall be allowed to a domestic ceding insurer when the reinsurance is ceded to an assuming insurer that is accredited by the commissioner as a reinsurer in this state. In order to be eligible for accreditation, a reinsurer must: (a) File with the commissioner evidence of its submission to this state's jurisdiction; (b) Submit to this state's authority to examine its books and records; (c) Be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer, be entered through and licensed to transact insurance or reinsurance in at least one state; (d) File annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and (e) Demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet the requirement of this paragraph (e) as of the time of its application if it maintains a surplus as regards policyholders in an amount not less than twenty million dollars and the commissioner has not denied its accreditation within ninety days after submission of its application. (4) (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this part 7 and the assuming insurer or United States branch of an alien assuming insurer: (I) Maintains a surplus as regards policyholders in an amount not less than twenty million dollars; and (II) Submits to the authority of this state to examine its books and records. (b) The requirement of subparagraph (I) of paragraph (a) of this subsection (4) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. (5) (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in section 103-704 (2), for the payment of the valid claims of its United States ceding insurers and their Colorado Revised Statutes 2019 Page 220 of 943 Uncertified Printout assigns and successors in interest. To enable the commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the national association of insurance commissioners' annual statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the commissioner and bear the expense of examination. (b) (I) Credit for reinsurance shall not be granted under this subsection (5) unless the form of the trust and any amendments to the trust have been approved by: (A) The commissioner of the state where the trust is domiciled; or (B) The commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust. (II) The form of the trust and any trust amendments also shall be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument must provide that contested claims are valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust must vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States ceding insurers and their assigns and successors in interest. The trust and the assuming insurer are subject to examination as determined by the commissioner. (III) The trust must remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year, the trustee of the trust shall report to the commissioner in writing the balance of the trust and list the trust's investments at the preceding year's end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire before the following December 31. (c) The following requirements apply to the following categories of assuming insurer: (I) The trust fund for a single assuming insurer must consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars, except as provided in subparagraph (II) of this paragraph (c). (II) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and must consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus shall not be reduced to an amount less than thirty percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust. (III) (A) In the case of a group including incorporated and individual unincorporated underwriters: For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust must consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to Colorado Revised Statutes 2019 Page 221 of 943 Uncertified Printout business ceded by United States domiciled ceding insurers to any underwriter of the group; for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this part 7, the trust must consist of a trusteed account in an amount not less than the respective underwriters' several insurance and reinsurance liabilities attributable to business written in the United States; and, in addition to these trusts, the group shall maintain in trust a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account. (B) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and are subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members. (C) Within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the commissioner an annual certification by the group's domiciliary regulator of the solvency of each underwriter member or, if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group. (IV) In the case of a group of incorporated underwriters under common administration, the group: (A) Must have continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation; (B) Shall maintain aggregate policyholders' surplus of at least ten billion dollars; (C) Shall maintain a trust fund in an amount not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group; (D) In addition, shall maintain a joint trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States domiciled ceding insurers of any member of the group as additional security for these liabilities; and (E) Within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, shall make available to the commissioner an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant. (6) (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the commissioner as a reinsurer in this state and secures its obligations in accordance with the requirements of this subsection (6). (b) In order to be eligible for certification, the assuming insurer must meet the following requirements: (I) The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to paragraph (d) of this subsection (6). (II) The assuming insurer must maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the commissioner pursuant to rule. (III) The assuming insurer must maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner pursuant to rule. (IV) The assuming insurer must agree to submit to the jurisdiction of this state, appoint the commissioner as its agent for service of process in this state, and agree to provide security Colorado Revised Statutes 2019 Page 222 of 943 Uncertified Printout for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment. (V) The assuming insurer must agree to meet applicable information filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis. (VI) The assuming insurer must satisfy any other requirements for certification deemed relevant by the commissioner. (c) An association including incorporated and individual unincorporated underwriters may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying the requirements of paragraph (b) of this subsection (6): (I) The association must satisfy its minimum capital and surplus requirements through the capital and surplus equivalents, net of liabilities, of the association and its members, which must include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the commissioner to provide adequate protection; (II) The incorporated members of the association must not be engaged in any business other than underwriting as a member of the association and are subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and (III) Within ninety days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the commissioner an annual certification by the association's domiciliary regulator of the solvency of each underwriter member or, if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association. (d) (I) The commissioner shall create and publish a list of qualified jurisdictions under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the commissioner as a certified reinsurer. (II) In order to determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction must agree in writing to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction shall not be recognized as a qualified jurisdiction if the commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered in the discretion of the commissioner. (III) The commissioner may consider a list of qualified jurisdictions published by the national association of insurance commissioners' committee process in determining qualified jurisdictions for purposes of this section. If the commissioner approves a jurisdiction as qualified that does not appear on the national association of insurance commissioners' list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification in accordance with criteria to be specified in rules promulgated by the commissioner. Colorado Revised Statutes 2019 Page 223 of 943 Uncertified Printout (IV) The commissioner shall recognize United States jurisdictions that meet the requirement for accreditation under the national association of insurance commissioners financial standards and accreditation program as qualified jurisdictions. (V) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the commissioner may suspend the reinsurer's certification indefinitely in lieu of revocation. (e) The commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the commissioner pursuant to rule. The commissioner shall publish a list of all certified reinsurers and their ratings. (f) (I) A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subsection (6) at a level consistent with its rating, as specified in rules promulgated by the commissioner. (II) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer must maintain security in a form acceptable to the commissioner and consistent with the provisions of section 10-3-703 or in a multibeneficiary trust in accordance with subsection (5) of this section, except as otherwise provided in this subsection (6). (III) If a certified reinsurer maintains a trust to fully secure its obligations subject to subsection (5) of this section, and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer must maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection (6) or comparable laws of other United States jurisdictions and for its obligations subject to subsection (5) of this section. It is a condition to the grant of certification in this subsection (6) that the certified reinsurer must have bound itself, by the language of the trust and agreement with the commissioner with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account. (IV) The minimum trusteed surplus requirements provided in subsection (5) of this section are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection (6); except that such trust must maintain a minimum trusteed surplus of ten million dollars. (V) With respect to obligations incurred by a certified reinsurer under this subsection (6), if the security is insufficient, the commissioner shall order the certified reinsurer to provide sufficient security for the incurred obligations within thirty days. If a certified reinsurer does not provide sufficient security for its obligations incurred under this subsection (6) within thirty days after being ordered to do so by the commissioner, the commissioner may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due. (VI) (A) For purposes of this subsection (6), a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent of its obligations. (B) As used in this subsection (6), the term "terminated" refers to revocation, suspension, voluntary surrender, and inactive status. Colorado Revised Statutes 2019 Page 224 of 943 Uncertified Printout (C) If the commissioner continues to assign a higher rating as permitted by other provisions of this section, the requirement of this subparagraph (VI) does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended. (g) If an applicant for certification has been certified as a reinsurer in a jurisdiction accredited by the national association of insurance commissioners, the commissioner has the discretion to defer to that jurisdiction's certification, and may defer to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state. (h) A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection (6), and the commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business. (7) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (2), (3), (4), (5), or (6) of this section, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction. (8) (a) If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted by subsections (4) and (5) of this section shall not be allowed unless the assuming insurer agrees in the reinsurance agreements: (I) That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and (II) To designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding insurer. (b) This subsection (8) is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement. (9) If the assuming insurer does not meet the requirements of subsection (2), (3), or (4) of this section, the credit permitted by subsection (5) or (6) of this section shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions: (a) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by paragraph (c) of subsection (5) of this section, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight all of the assets of the trust fund. (b) The assets shall be distributed by, and claims must be filed with and valued by, the commissioner with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies. (c) If the commissioner with regulatory oversight determines that the assets of the trust fund or any part of the assets are not necessary to satisfy the claims of the United States ceding Colorado Revised Statutes 2019 Page 225 of 943 Uncertified Printout insurers of the grantor of the trust, the commissioner with regulatory oversight of the trustee shall return the assets or part of the assets for distribution in accordance with the trust agreement. (d) The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this subsection (9). (10) (a) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer's accreditation or certification. (b) The commissioner shall give the reinsurer notice and opportunity for hearing. The suspension or revocation must not take effect until after the commissioner's order on hearing, unless: (I) The reinsurer waives its right to hearing; (II) The commissioner's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under paragraph (g) of subsection (6) of this section; or (III) The commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner's action. (c) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with section 10-3-703. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance shall be granted after the effective date of the revocation except to the extent that the reinsurer's obligations under the contract are secured in accordance with paragraph (f) of subsection (6) of this section or section 10-3-703. (11) Concentration risk. (a) A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the commissioner within thirty days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds fifty percent of the domestic ceding insurer's last reported surplus to policyholders or after it has determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed fifty percent of the domestic ceding insurer's last reported surplus to policyholders. The notification must demonstrate that the exposure is safely managed by the domestic ceding insurer. (b) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the commissioner within thirty days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than twenty percent of the ceding insurer's gross written premium in the prior calendar year or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed twenty percent of the ceding insurer's gross written premium in the prior calendar year. The notification must demonstrate that the exposure is safely managed by the domestic ceding insurer. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1202, § 1, effective January 1, 2015. Colorado Revised Statutes 2019 Page 226 of 943 Uncertified Printout Editor's note: In 2014, the provisions of subsection (8) were relettered to conform to statutory format. 10-3-703. Asset or reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 10-3-702. (1) An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 10-3-702 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction must be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the reinsurance contract if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution, as defined in section 10-3-704 (2). This security may be in the form of: (a) Cash; (b) Securities listed by the securities valuation office of the national association of insurance commissioners, including those deemed exempt from filing as defined by the purposes and procedures manual of the securities valuation office, and qualifying as admitted assets; (c) (I) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, as defined in section 10-3-704 (1), effective no later than December 31 of the year for which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement; (II) Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or (d) Any other form of security acceptable to the commissioner. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1211, § 1, effective January 1, 2015. 10-3-704. Qualified United States financial institutions. (1) For purposes of section 10-3-703 (1)(c), a "qualified United States financial institution" means an institution that: (a) Is organized or, in the case of a United States office of a foreign banking organization, licensed, under the laws of the United States or any state of the United States; (b) Is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and (c) Has been determined by either the commissioner or the securities valuation office of the national association of insurance commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner. (2) A "qualified United States financial institution" means, for purposes of those provisions of this part 7 specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that: Colorado Revised Statutes 2019 Page 227 of 943 Uncertified Printout (a) Is organized, or, in the case of a United States branch or agency office of a foreign banking organization, licensed, under the laws of the United States or any state of the United States and has been granted authority to operate with fiduciary powers; and (b) Is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1212, § 1, effective January 1, 2015. 10-3-705. Rules. The commissioner may adopt rules implementing this part 7. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1212, § 1, effective January 1, 2015. 10-3-706. Reinsurance agreements affected. This part 7 applies to all cessions after January 1, 2015, under reinsurance agreements that have an inception, anniversary, or renewal date not less than six months after January 1, 2015. Source: L. 2014: Entire part R&RE, (HB 14-1315), ch. 295, p. 1212, § 1, effective January 1, 2015. PART 8 INSURANCE HOLDING COMPANY SYSTEMS Editor's note: This part 8 was numbered as article 33 of chapter 72, C.R.S. 1963. It was repealed and reenacted in 2014, resulting in the addition, relocation, or elimination of sections as well as subject matter. For amendments to this part 8 prior to 2014, consult the 2013 Colorado Revised Statutes and the Colorado statutory research explanatory note beginning on page vii in the front of this volume. Former C.R.S. section numbers are shown in editor's notes following those sections that were relocated. For a detailed comparison of this part 8, see the comparative tables located in the back of the index. Cross references: For the applicability of part 12 of article 4 of this title (producercontrolled property and casualty insurers) on the provisions of this part 8, see § 10-4-1205. 10-3-801. Definitions. As used in this part 8, unless the context otherwise requires: (1) An "affiliate" of, or person "affiliated" with, a specific person is a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified. (2) "Commissioner" means the commissioner of insurance, the commissioner's deputies, or the division of insurance, as appropriate. (3) "Control", including the terms "controlling", "controlled by", and "under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting Colorado Revised Statutes 2019 Page 228 of 943 Uncertified Printout securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent or more of the voting securities of any other person. A person may rebut this presumption by a showing made in the manner provided by section 10-3-804 (9) that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect. (4) "Enterprise risk" means any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including anything that would cause the insurer's risk-based capital to fall into company action level as set forth in rules promulgated by the commissioner or would cause the insurer to be in hazardous financial condition as set forth in rules promulgated by the commissioner. (4.5) "Group-wide supervisor" means a regulatory official who is authorized to conduct and coordinate group-wide supervision activities and who is designated or acknowledged by the commissioner pursuant to section 10-3-807.5. (5) "Insurance holding company system" means two or more affiliated persons, one or more of which is an insurer. (6) "Insurer" has the meaning set forth in section 10-3-502 (12); except that "insurer" includes fraternal benefit societies and health maintenance organizations and does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. (6.5) "Internationally active insurance group" means an insurance holding company system that: (a) Includes an insurer registered pursuant to section 10-3-804; (b) Writes insurance premiums in at least three countries; (c) Writes insurance premiums in countries outside the United States, which insurance premiums account for at least ten percent of the insurance holding company system's total gross written premiums; and (d) Has, based on an average of the immediately preceding three years, total assets of at least fifty billion dollars or total gross written premiums of at least ten billion dollars. (7) "NAIC" or "national association of insurance commissioners" means the organization of insurance regulators from the fifty states, the District of Columbia, and the four United States territories. (8) "Person" means an individual, corporation, limited liability company, partnership, association, joint stock company, trust, unincorporated organization, any similar entity, or any combination of the foregoing acting in concert but does not include a joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property. Colorado Revised Statutes 2019 Page 229 of 943 Uncertified Printout (9) "Security holder" of a specified person means one who owns any security of the person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. (10) "Subsidiary" of a specified person means an affiliate controlled by the person, either directly or indirectly through one or more intermediaries. (11) "Voting security" means a security convertible into or evidencing a right to acquire a voting security. (12) "Wholly owned subsidiary" means a subsidiary owned by an insurer that owns shares of the issued and outstanding voting stock of the subsidiary having at least ninety-five percent of the total voting power of the stock for the election of directors. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1318, § 2, effective July 1. L. 2019: (4.5) and (6.5) added, (HB 19-1291), ch. 188, p. 2090, § 2, effective August 2. Editor's note: This section is similar to former § 10-3-801 as it existed prior to 2014. 10-3-802. Subsidiaries of insurers. (1) A domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries engaged in the following kinds of business: (a) Any kind of insurance business authorized by the jurisdiction in which it is incorporated; (b) Acting as an insurance broker or insurance agent for its parent or for any of its parent's insurer subsidiaries; (c) Investing, reinvesting, or trading in securities for its own account or that of its parent, a subsidiary of its parent, or an affiliate or subsidiary; (d) Management of an investment company subject to or registered pursuant to the federal "Investment Company Act of 1940", 15 U.S.C. sec. 80a-1 et seq., as amended, including related sales and services; (e) Acting as a broker-dealer subject to or registered pursuant to the federal "Securities Exchange Act of 1934", 15 U.S.C. sec. 78a et seq., as amended; (f) Rendering investment advice to governments, government agencies, corporations, or other organizations or groups; (g) Rendering other services related to the operations of an insurance business, such as actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal, and collection services; (h) Ownership and management of assets that the parent corporation could itself own or manage; (i) Acting as administrative agent for a governmental instrumentality that is performing an insurance function; (j) Financing of insurance premiums, agents, and other forms of consumer financing; (k) Any other business activity determined by the commissioner to be reasonably ancillary to an insurance business; (l) Owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in this section; and Colorado Revised Statutes 2019 Page 230 of 943 Uncertified Printout (m) Any other kind of business that, in the opinion of the commissioner, would be in the best interest of the insurer and would not be detrimental to the policyholders or the public. (2) In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under other provisions of this title, a domestic insurer may also: (a) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts that do not exceed the lesser of ten percent of the insurer's assets or fifty percent of the insurer's surplus as regards policyholders if, after such investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs. In calculating the amount of the investments, the commissioner shall exclude investments in domestic or foreign insurance subsidiaries and shall include: (I) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; (II) All amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities; and (III) All contributions to the capital or surplus of a subsidiary after its acquisition or formation. (b) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if each subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in paragraph (a) of this subsection (2) or in sections 10-3-213 to 10-3-242 applicable to the insurer. For the purpose of this paragraph (b), "the total investment of the insurer" includes: (I) Any direct investment by the insurer in an asset; and (II) The insurer's proportionate share of any investment in an asset by a subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of the subsidiary; and (c) With the approval of the commissioner, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries if, after the investment, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. (3) Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries made in accordance with subsection (2) of this section are admitted assets of a domestic insurer, and such investments are not subject to any of the otherwise-applicable restrictions or limitations applicable to the investments of insurers. (4) Any provision of this title to the contrary notwithstanding, any investment by a domestic insurer in the common stock, preferred stock, debt obligations, or other securities of one or more insurance companies that are wholly owned subsidiaries of the domestic insurer are admitted assets of the domestic insurer, subject to the following provisions: (a) If the authorized lines of business of the investing company and any such wholly owned subsidiary corporation together do not constitute the lines of business of a multiple-line company, the common stock, preferred stock, debt obligations, and other securities of the Colorado Revised Statutes 2019 Page 231 of 943 Uncertified Printout subsidiary corporation are not at any time an admitted asset of the investing company unless at such time the two companies have, without taking the common stock, preferred stock, debt obligations, and other securities into account as an asset of the investing company, a combined capital or guaranty fund and a combined surplus that are at least equal, respectively, to the sum of the minimum capital or minimum guaranty fund required by law for the authorized line of business of each of the two companies and the sum of the minimum surplus required by law for the authorized line of business of each of the two companies; except that this paragraph (a) does not apply to an investing company that is a fraternal benefit society. (b) If the authorized lines of business of the investing company and any such wholly owned subsidiary corporation together constitute the lines of business of a multiple-line company, the common stock, preferred stock, debt obligations, and other securities of the wholly owned subsidiary corporation are not at any time an admitted asset of the investing company unless at such time the two companies have, without taking the stock into account as an asset of the investing company, a combined capital or guaranty fund and a combined surplus that are at least equal, respectively, to the minimum capital or guaranty fund and the minimum surplus required by law for the multiple-line company. (c) If the authorized lines of business of any two insurance companies that are members of a chain of corporations directly or indirectly owned by a common parent corporation together constitute the lines of business of a multiple-line company, the common stock, preferred stock, debt obligations, and other securities of either of the two insurance companies are at any time an admitted asset of any insurance company, including the common parent corporation, that is a member of such chain of corporations, unless at such time the two insurance companies have a combined capital or guaranty fund and a combined surplus that are at least equal, respectively, to the minimum capital or guaranty fund and the minimum surplus required by law for such a multiple-line company. (5) Whether any investment made pursuant to subsection (2) of this section meets the applicable requirements of that subsection (2) is to be determined before the investment is made, by calculating the applicable investment limitations as though the investment had already been made, taking into account the then-outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends. (6) If an insurer ceases to control a subsidiary, it shall dispose of any investment made in the subsidiary pursuant to this section within three years after the time of the cessation of control or within such further time as the commissioner may prescribe, unless at any time after the investment has been made, the investment meets the requirements for investment under any other section of this title and the insurer has so notified the commissioner. (7) Nothing in this part 8 prohibits a domestic insurer that, with the prior approval of the commissioner, organized or acquired a subsidiary from continuing to hold the insurer's investments in the subsidiary or from making further investments in the subsidiary consistent with subsection (2) of this section, if the subsidiary engages only in the kind of business that was represented to the commissioner as a basis for such approval. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1320, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-802 as it existed prior to 2014. Colorado Revised Statutes 2019 Page 232 of 943 Uncertified Printout 10-3-803. Acquisition of control of or merger with domestic insurer - definitions. (1) (a) No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the consummation of the exchange or acquisition, the person would, directly, indirectly, by conversion, or by exercise of any right to acquire, be in control of the insurer, and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer unless, at the time the offer, request, or invitation is made or the agreement is entered into, or before the acquisition of the securities if no offer or agreement is involved, the person has filed with the commissioner and has sent to the insurer a statement containing the information required by this section and the commissioner has approved the offer, request, invitation, agreement, or acquisition in the manner prescribed in this part 8. (b) In addition, if the person acting pursuant to this subsection (1) is: (I) An individual, the person shall submit a set of fingerprints to the commissioner pursuant to subsection (3) of this section; (II) A corporation, each executive officer and director of the corporation shall submit a set of fingerprints to the commissioner pursuant to subsection (3) of this section. (c) For purposes of this section: (I) "Domestic insurer" includes any person controlling a domestic insurer unless the person, as determined by the commissioner, is either directly or through its affiliates primarily engaged in business other than the business of insurance. (II) "Person" does not include any securities broker holding, in the usual and customary broker's function, less than twenty percent of the voting securities of an insurance company or of any person that controls an insurance company. (d) A controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least thirty days before the cessation of control. The commissioner shall determine those instances in which the party seeking to divest or to acquire a controlling interest in an insurer will be required to file for and obtain approval of the transaction. The information must remain confidential until the conclusion of the transaction unless the commissioner, in his or her discretion, determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in paragraph (a) of this subsection (1) has been filed, this paragraph (d) does not apply. (e) With respect to a transaction subject to this section, the acquiring person shall also file a preacquisition notification with the commissioner, which must contain the information set forth in section 10-3-803.5 (3)(a). A failure to file the notification subjects the person to penalties specified in section 10-3-803.5 (5)(c). (2) The statement filed pursuant to paragraph (a) of subsection (1) of this section shall be made under oath or affirmation and must contain the following: (a) (I) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subsection (1) of this section is to be effected, referred to in this section as the acquiring party; Colorado Revised Statutes 2019 Page 233 of 943 Uncertified Printout (II) If the person is an individual, his or her principal occupation, all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations during the past ten years; (III) If the person is not an individual, a report of the nature of its business operations during the past five years or for the lesser period as the person and any predecessors have been in existence; an informative description of the business intended to be done by the person and the person's subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the person or who perform or will perform functions appropriate to such positions. The list must include for each individual the information required by subparagraph (II) of this paragraph (a). (b) The source, nature, and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction where funds were or are to be obtained for any such purpose, including any pledge of the insurer's stock or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing consideration; except that, where a source of consideration is a loan made in the lender's ordinary course of business, the identity of the lender must remain confidential if the person filing such statement so requests; (c) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each acquiring party, or for the lesser period as the acquiring party and any predecessors have been in existence, and similar unaudited information as of a date not earlier than ninety days before the filing of the statement; (d) Any plans or proposals that each acquiring party may have to liquidate the insurer, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management; (e) The number of shares of any security referred to in subsection (1) of this section that each acquiring party proposes to acquire; the terms of the offer, request, invitation, agreement, or acquisition referred to in subsection (1) of this section; and a statement as to the method by which the fairness of the proposal was arrived at; (f) The amount of each class of any security referred to in subsection (1) of this section that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party; (g) A full description of any contracts, arrangements, or understandings with respect to any security referred to in subsection (1) of this section in which any acquiring party is involved, including the transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description must identify the persons with whom the contracts, arrangements, or understandings have been entered into. (h) A description of the purchase of any security referred to in subsection (1) of this section during the twelve calendar months preceding the filing of the statement by any acquiring party, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid; (i) A description of any recommendations to purchase any security referred to in subsection (1) of this section made during the twelve calendar months preceding the filing of the statement by any acquiring party, or by anyone based upon interviews or at the suggestion of the acquiring party; Colorado Revised Statutes 2019 Page 234 of 943 Uncertified Printout (j) Copies of all tender offers for, requests, or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in subsection (1) of this section, and, if distributed, of additional soliciting material relating to them; (k) The term of any agreement, contract, or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in subsection (1) of this section for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard to the solicitation; (l) An agreement by the person required to file the statement referred to in subsection (1) of this section that the person will provide the annual report, specified in section 10-3-804 (12), for so long as control exists; (m) An acknowledgment by the person required to file the statement referred to in subsection (1) of this section that the person and all subsidiaries within its control in the insurance holding company system will provide information to the commissioner upon request as necessary to evaluate enterprise risk to the insurer; and (n) Such additional information as the commissioner may by rule prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest. (3) (a) Each person described in subsection (1)(b) of this section shall submit a set of fingerprints to the commissioner at the time of filing the statement described in subsection (1)(a) of this section. The commissioner shall forward the fingerprints to the Colorado bureau of investigation for the purpose of conducting a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. The employer bears only the actual costs of the record check. (b) When the results of a fingerprint-based criminal history record check of a person performed pursuant to this subsection (3) reveal a record of arrest without a disposition, the commissioner shall require that person to submit to a name-based criminal history record check, as defined in section 22-2-119.3 (6)(d). (4) If the person required to file the statement referred to in subsection (1) of this section is a partnership, limited partnership, syndicate, or other group, the commissioner may require the person to give the information called for by paragraphs (a) to (n) of subsection (2) of this section with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member, or person is a corporation or the person required to file the statement referred to in subsection (1) of this section is a corporation, the commissioner may require the corporation to give the information called for by paragraphs (a) to (n) of subsection (2) of this section with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than ten percent of the outstanding voting securities of the corporation. If any material change occurs in the facts set forth in the statement filed with the commissioner and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the commissioner and sent to the insurer within two business days after the person learns of the change. (5) If any offer, request, invitation, agreement, or acquisition referred to in subsection (1) of this section is proposed to be made by means of a registration statement under the federal "Securities Act of 1933", 15 U.S.C. sec. 77a et seq., as amended, or in circumstances requiring the disclosure of similar information under the federal "Securities Exchange Act of 1934", 15 Colorado Revised Statutes 2019 Page 235 of 943 Uncertified Printout U.S.C. sec. 78a et seq., as amended, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subsection (1) of this section may utilize such documents in furnishing the information called for by that statement. (6) (a) The commissioner shall conduct an independent investigation to determine the impact of a proposed merger on competition: (I) When the proposed merger involves a transaction that the commissioner determines, under section 10-3-803.5 (4)(b), would present prima facie evidence of a violation of the competitive standard; and (II) If the merger or acquisition involves a domestic entity authorized under article 16 of this title or referenced in section 6-18-302 (1)(b)(IV), C.R.S., or a domestic insurer authorized under section 10-3-102 that writes more than fifty percent of its business as health insurance coverage. (b) The investigation must include an analysis of the probable effects of the merger on consumers and on suppliers of services. The commissioner shall not rely solely on representations of insurers to determine whether the merger will produce economies of scale or economies in resource utilization that cannot be achieved feasibly in any other way. The investigation must also include reviewing the market conduct examination and financial examination reports for this state or any other state, consumer complaint information from records maintained by the division or any other state regulatory agency, and any information from any state or federal agency related to the applicant. The investigation must commence no later than fifteen days after the applicant files the notification referred to in paragraph (e) of subsection (1) of this section. (c) The commissioner shall make public the report of the independent investigation conducted pursuant to this subsection (6) no later than five business days after the submission of the report to the commissioner, subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S. (d) The commissioner shall issue an executive summary, subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., of the competitive impact analysis filed by the applicant to the transaction no later than fifteen business days after the analysis is filed with the division. The applicant shall file the competitive impact analysis at the same time the applicant files the notification referred to in paragraph (e) of subsection (1) of this section with the division. (e) The commissioner shall make all data and reports pertaining to the proposed merger and collected or used by the commissioner in his or her investigation and analysis available to the public; except that, in the commissioner's discretion, the commissioner may redact specific items of proprietary information. If the insurer claims that information provided is proprietary, the insurer has the burden of proof on that issue. (f) The commissioner shall complete the independent investigation pursuant to this subsection (6) no later than the day on which the application is deemed complete by the division. The commissioner shall coordinate the completion of the independent investigation with the experts retained pursuant to paragraph (g) of subsection (8) of this section. The applicant shall bear any expenses associated with the independent investigation pursuant to subsection (8) of this section. (7) The commissioner shall approve any merger or other acquisition of control referred to in subsection (1) of this section unless, after an independent investigation pursuant to Colorado Revised Statutes 2019 Page 236 of 943 Uncertified Printout subsection (6) of this section, and a public hearing on the acquisition, the commissioner finds that: (a) After the change of control, the domestic insurer referred to in subsection (1) of this section would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed; (b) The effect of the merger or other acquisition of control would be substantially to lessen competition in insurance in this state or tend to create a monopoly. In applying the competitive standard in this paragraph (b): (I) The informational requirements of section 10-3-803.5 (3)(a) and the standards of section 10-3-803.5 (4)(b) apply; (II) The commissioner shall not disapprove the merger or other acquisition if the commissioner finds that any of the situations meeting the criteria provided by section 10-3-803.5 (4)(c) exist; and (III) The commissioner may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time. (c) The financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders; (d) The plans or proposals that the acquiring party has to liquidate the insurer, sell its assets or consolidate or merge it with any person, or make any other material change in its business or corporate structure or management are unfair and unreasonable to policyholders of the insurer and not in the public interest; (e) The competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control; or (f) The acquisition is likely to be hazardous or prejudicial to the insurance-buying public. (8) (a) The commissioner shall provide public notice of the filing of an application for a merger or acquisition no later than five business days after the receipt of the initial application. The commissioner shall also provide a general statement to the public of the process and procedures concerning a merger or acquisition of a domestic insurer. The statement must be a clear and concise statement of how the public may participate in the review of a merger or acquisition transaction, including a public hearing or providing written comments to the commissioner. (b) No later than fifteen business days after the initial application for a merger pursuant to this section, the commissioner and the applicant shall establish the elements of a public notice of the transaction. The commissioner shall publish the notice no later than seven days after the division deems the application to be complete. (c) The commissioner shall hold the public hearing referred to in subsection (7) of this section within thirty days after the statement required by subsection (1) of this section is filed, and the commissioner shall give at least twenty days' notice of the hearing to the person filing the statement. The commissioner shall give not less than seven days' notice of the public hearing pursuant to paragraph (b) of this subsection (8) to the insurer and to the public. The insurer shall give the notice to its security holders. The commissioner shall make a determination within thirty days after the conclusion of the hearing. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interests Colorado Revised Statutes 2019 Page 237 of 943 Uncertified Printout may be affected have the right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments and, in connection therewith, are entitled to conduct discovery proceedings in the same manner as is presently allowed in the district courts of this state. All discovery proceedings must be concluded no later than three days before the commencement of the public hearing. (d) The deadline for submission of written public comment to respond to testimony from the applicant is ten business days after the hearing. The commissioner shall review all responses and provide a report summarizing all public testimony. (e) If the proposed acquisition of control will require the approval of a state other than Colorado in addition to the approval of the commissioner, the public hearing referred to in subsection (7) of this section may be held on a consolidated basis upon request of the person filing the statement referred to in subsection (1) of this section. The person shall file the statement referred to in subsection (1) of this section with the NAIC within five days after making the request for a public hearing. A commissioner may opt out of a consolidated hearing and shall provide notice to the applicant of the opt-out within ten days after the receipt of the statement referred to in subsection (1) of this section. A hearing conducted on a consolidated basis must be public and shall be held within the United States before the commissioners of the states in which the insurers are domiciled. The commissioners shall hear and receive evidence. A commissioner may attend the hearing in person or by telecommunication. (f) In connection with a change of control of a domestic insurer, the commissioner shall make any determination that the person acquiring control of the insurer is required to maintain or restore the capital of the insurer to the level required by the laws and rules of this state not later than sixty days after the date of notification of the change in control submitted pursuant to paragraph (a) of subsection (1) of this section. (g) The commissioner may retain, at the acquiring person's expense, any attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist the commissioner in reviewing the proposed acquisition of control. (9) The insurer shall mail a synopsis of the statement referred to in subsection (1) of this section, and all notices of public hearings held pursuant to subsection (7) of this section, to its shareholders within five business days after the insurer has received such statements, amendments, other material, or notices filed pursuant to this section. The person making the filing shall bear the expenses of the mailing. As security for the payment of such expenses, the person shall file with the commissioner an acceptable bond or other deposit in an amount to be determined by the commissioner. (10) This section does not apply to: (a) An exchange of stock of a domestic insurer actually accomplished in accordance with sections 10-3-604 to 10-3-606, or any preliminary agreement between a domestic insurer and any other corporation entered into in contemplation of the adoption of a plan of exchange under part 6 of this article; or (b) An offer, request, invitation, agreement, or acquisition that the commissioner, by order, exempts from this section as not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer, or as otherwise not comprehended within the purposes of this section. (11) The following are violations of this section: Colorado Revised Statutes 2019 Page 238 of 943 Uncertified Printout (a) The failure to file any statement, amendment, or other material required to be filed pursuant to subsection (1) or (2) of this section; or (b) The effectuation of, or any attempt to effectuate, an acquisition of control of, or merger with, a domestic insurer unless the commissioner has given his or her approval to the acquisition or merger. (12) The courts of this state have jurisdiction over every person not resident, domiciled, or authorized to do business in this state who files a statement with the commissioner under this section and over all actions involving the person arising out of violations of this section, and each such person is deemed to have performed acts equivalent to and constituting an appointment by the person of the commissioner to be his or her true and lawful attorney upon whom may be served all lawful process in any action, suit, or proceeding arising out of a violation of this section. Copies of all such lawful process shall be served on the commissioner and the commissioner shall transmit the process by registered or certified mail to the person at his or her last-known address. (13) If the procedures set forth in this section are not followed before the issuance of the order of the commissioner that approves or disapproves the merger, the aggrieved party may seek remedies pursuant to section 10-3-814. (14) Nothing in this section limits the commissioner's ability to conduct a hearing for transactions that do not meet the requirements in subsection (6) of this section. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1323, § 2, effective July 1. L. 2019: (3) amended, (HB 19-1166), ch. 125, p. 538, § 3, effective April 18. Editor's note: This section is similar to former § 10-3-803 as it existed prior to 2014. 10-3-803.5. Acquisitions involving insurers not otherwise covered - definitions. (1) As used in this section, unless the context otherwise requires: (a) "Acquisition" means an agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes the acquisition of voting securities, the acquisition of assets, bulk reinsurance, and mergers. (b) For the purposes of subparagraph (IV) of paragraph (b) of subsection (2) of this section, "insurer" includes any company or group of companies under common management, ownership, or control. (c) "Involved insurer" includes an insurer that either acquires or is acquired through an acquisition, is affiliated with an insurer that acquires or is acquired through an acquisition, or is the result of a merger. (d) "Market" means: (I) For the purposes of subparagraph (IV) of paragraph (b) of subsection (2) of this section, direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state. (II) For the purposes of paragraph (b) of subsection (4) of this section, the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the NAIC and to information, if any, submitted by parties to Colorado Revised Statutes 2019 Page 239 of 943 Uncertified Printout the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, such line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state. (2) Scope. (a) Except as exempted in paragraph (b) of this subsection (2), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. (b) This section does not apply to the following: (I) A purchase of securities solely for investment purposes if the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under section 10-3-801 (3), the purchase is not solely for investment purposes unless the insurance commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of this state. (II) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if preacquisition notification is filed with the commissioner in accordance with paragraph (b) of subsection (3) of this section thirty days before the proposed effective date of the acquisition; except that preacquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subparagraph of this paragraph (b); (III) The acquisition of already affiliated persons; (IV) An acquisition if, as an immediate result of the acquisition: (A) In no market would the combined market share of the involved insurers exceed five percent of the total market; (B) There would be no increase in any market share; or (C) In no market would the combined market share of the involved insurers exceed twelve percent of the total market and the combined market share increase by more than two percent of the total market; (V) An acquisition for which a preacquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or (VI) An acquisition of an insurer whose domiciliary insurance commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternatives to improving its condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner to the commissioner of this state. (3) (a) An acquisition covered by subsection (2) of this section may be subject to an order pursuant to subsection (5) of this section unless the acquiring person files a preacquisition notification and the waiting period has expired. The acquired person may file a preacquisition notification. The commissioner shall give confidential treatment to information submitted under this subsection (3) in the same manner as otherwise provided in this part 8; except that the notice required by subsection (3)(d)(I) of this section must include the information specified in subsection (3)(d)(I) of this section if the preacquisition notification presents prima facie evidence of a violation of the competitive standard specified in subsection (4)(b) of this section. Colorado Revised Statutes 2019 Page 240 of 943 Uncertified Printout (b) The preacquisition notification must be in the form and contain the information as prescribed by the NAIC relating to those markets which, under subparagraph (IV) of paragraph (b) of subsection (2) of this section, cause the acquisition not to be exempted from this section. The commissioner may require additional material and information as deemed necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (4) of this section. The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the economist indicating his or her ability to render an informed opinion. (c) Except as otherwise provided in subsection (3)(d) of this section: (I) The waiting period begins on the date of receipt by the commissioner of a preacquisition notification and ends on the earlier of the thirtieth day after the date of receipt or termination of the waiting period by the commissioner; and (II) Before the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period ends on the earlier of the thirtieth day after receipt of the additional information by the commissioner or termination of the waiting period by the commissioner. (d) If the proposed acquisition involves one or more health insurers: (I) The commissioner shall provide public notice of the filing of an application for an acquisition of control referred to in subsection (2)(a) of this section no later than five business days after the receipt of the preacquisition notification required by subsection (3)(a) of this section. If the preacquisition notification presents prima facie evidence of a violation of the competitive standard specified in subsection (4)(b) of this section, the notice must include: (A) The relevant product for which prima facie evidence of the violation of the competitive standard was presented in the preacquisition notice; (B) The relevant geographic market for which prima facie evidence of the violation of the competitive standard was presented in the preacquisition notice; and (C) As specified in subsection (4)(b)(I)(A) or (4)(b)(I)(B) of this section, the shares of the market in which prima facie evidence of the violation of the competitive standard was presented in the preacquisition notice. (II) The commissioner shall review the impact of a proposed acquisition on competition when the proposed acquisition involves a transaction that the commissioner determines would present prima facie evidence of a violation of the competitive standard specified in subsection (4) of this section. The review must include a public hearing or an opportunity for the public to submit written comments to the commissioner. (III) The waiting period begins on the date of receipt by the commissioner of a preacquisition notification and, except as specified in subsection (3)(d)(IV) of this section, ends on the earlier of the thirtieth day after the date of receipt of the preacquisition notification or termination of the waiting period by the commissioner. (IV) If the commissioner allows for public comment as part of the review of a merger, the waiting period ends on the earlier of the thirtieth day after the date of receipt of the preacquisition notification or termination of the waiting period by the commissioner. If the commissioner holds a hearing as part of the review of a merger, the waiting period ends on the date of the hearing. Colorado Revised Statutes 2019 Page 241 of 943 Uncertified Printout (V) Before the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition. (VI) Nothing in this section prevents an applicant from making the preacquisition notification available for confidential stakeholder inspection. (4) Competitive standard. (a) The commissioner may enter an order under paragraph (a) of subsection (5) of this section with respect to an acquisition if: (I) There is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly; or (II) The insurer fails to file adequate information in compliance with subsection (3) of this section. (b) In determining whether a proposed acquisition would violate the competitive standard of paragraph (a) of this subsection (4), the commissioner shall consider the following: (I) An acquisition covered under section 10-3-803 (2) involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards if one of the following occurs: (A) The market is highly concentrated and the involved insurers possess the following shares of the market: Insurer AInsurer B 4%4% or more 10%2% or more 15%1% or more (B) The market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer AInsurer B 5%5% or more 10%4% or more 15%3% or more 19%1% or more (II) A highly concentrated market is one in which the share of the four largest insurers is seventy-five percent or more of the market. Percentages not shown in the tables of subsubparagraphs (A) and (B) of subparagraph (I) of this paragraph (b) are interpolated proportionately to the percentages that are shown. For the purpose of subparagraph (I) of this paragraph (b), the insurer with the largest share of the market is deemed to be insurer A. (III) Whether there is a significant trend toward increased concentration in the market. There is a significant trend toward increased concentration in the market when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven percent or more of the market over a period of time extending from any base year five to ten years prior to the acquisition up to the time of the acquisition. An acquisition covered under subsection (2) of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection (4) if: (A) There is a significant trend toward increased concentration in the market; Colorado Revised Statutes 2019 Page 242 of 943 Uncertified Printout (B) One of the insurers involved is one of the insurers in a grouping of large insurers showing the requisite increase in the market share; and (C) Another involved insurer's market is two percent or more; and (IV) Even though an acquisition is not prima facie violative of the competitive standard under subparagraph (I) or (III) of this paragraph (b), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subparagraph (I) or (III) of this paragraph (b), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subparagraph (IV) include the following: Market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market. (c) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (d) The commissioner shall not enter an order under paragraph (a) of subsection (5) of this section if the acquisition will: (I) Yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way and the public benefits that would arise from such economies exceed the public benefits that would arise from not lessening competition; or (II) Substantially increase the availability of insurance and the public benefits of the increase exceed the public benefits that would arise from not lessening competition. (5) Orders and penalties. (a) (I) If an acquisition violates the standards of this section, the commissioner may enter an order: (A) Requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or (B) Denying the application of an acquired or acquiring insurer for a license to do business in this state. (II) The commissioner shall not enter an order under this paragraph (a) unless: (A) There is a hearing on the proposed order; (B) Except for a hearing held pursuant to subsection (3)(d) of this section, notice of the hearing is issued before the end of the waiting period and not less than fifteen days before the hearing; (C) For a hearing held pursuant to subsection (3)(d) of this section, notice of the hearing is issued by the later of the thirtieth day after receipt by the commissioner of a preacquisition notification or by the date the commissioner sets for the receipt of public comments; (D) Except for a hearing held pursuant to subsection (3)(d) of this section, the hearing is concluded and the order is issued no later than sixty days after the date of the filing of the preacquisition notification with the commissioner; and (E) For a hearing held pursuant to subsection (3)(d) of this section, the hearing is concluded and the order is issued no later than sixty days after the end of the waiting period. (III) Every order must be accompanied by a written decision of the commissioner setting forth findings of fact and conclusions of law. (IV) An order entered pursuant to this paragraph (a) does not apply if the acquisition is not consummated. Colorado Revised Statutes 2019 Page 243 of 943 Uncertified Printout (b) A person who violates a cease-and-desist order of the commissioner under paragraph (a) of this subsection (5) and while the order is in effect is, after notice and hearing and upon order of the commissioner, subject at the discretion of the commissioner to one or more of the following: (I) A monetary penalty of not more than ten thousand dollars for every day of violation; or (II) Suspension or revocation of the person's license. (c) An insurer or other person who fails to make any filing required by this section, and who also fails to demonstrate a good-faith effort to comply with any filing requirement, is subject to a fine of not more than fifty thousand dollars. (6) Sections 10-3-810 (2) and (3) and 10-3-812 do not apply to acquisitions covered under subsection (2) of this section. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1332, § 2, effective July 1. L. 2017: (3)(a), (3)(c), and (5)(a)(II) amended and (3)(d) added, (SB 17-198), ch. 300, p. 1643, § 1, effective June 2. Editor's note: This section is similar to former § 10-3-803.5 as it existed prior to 2014. 10-3-804. Registration of insurers. (1) (a) Every insurer that is authorized to do business in this state and that is a member of an insurance holding company system shall register with the commissioner; except that registration is not required for a foreign insurer that is subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile that are substantially similar to those contained in: (I) This section; (II) Section 10-3-805 (1)(a), (2), or (3); and (III) Either section 10-3-805 (1)(b) or a provision such as the following: "Each registered insurer must keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen days after the end of the month in which it learns of each change or addition." (b) An insurer that is subject to registration under this section shall register within fifteen days after it becomes subject to registration, and annually thereafter by April 30 of each year for the previous calendar year, unless the commissioner for good cause shown extends the time for registration, and then within the extended time. The commissioner may require any insurer authorized to do business in the state that is a member of an insurance holding company system and that is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (3) of this section, or other information filed by the insurance company with the insurance regulatory authority of its domiciliary jurisdiction. (2) Every insurer subject to registration shall file the registration statement with the commissioner on a form and in a format prescribed by the NAIC, which must contain the following current information: (a) The capital structure, general financial condition, and ownership and management of the insurer and any person controlling the insurer; (b) The identity and relationship of every member of the insurance holding company system; Colorado Revised Statutes 2019 Page 244 of 943 Uncertified Printout (c) The following agreements in force, and transactions currently outstanding or that have occurred during the last calendar year between the insurer and its affiliates: (I) Loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates; (II) Purchases, sales, or exchange of assets; (III) Transactions not in the ordinary course of business; (IV) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business; (V) All management agreements, service contracts, and cost-sharing arrangements; (VI) Reinsurance agreements; (VII) Dividends and other distributions to shareholders; (VIII) Consolidated tax allocation agreements; (IX) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes such loans or extensions of credit with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of, or make investments in any affiliate of the insurer making such loans or extensions of credit; and (X) Any material transactions, specified by rule, that the commissioner determines may adversely affect the interest of such insurer's policyholders; (d) Information about each pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system; (e) If requested by the commissioner, financial statements of or within an insurance holding company system, including all affiliates. Financial statements may include annual audited financial statements filed with the federal securities and exchange commission pursuant to the federal "Securities Act of 1933", 15 U.S.C. sec. 77a et seq., as amended, or the federal "Securities Exchange Act of 1934", 15 U.S.C. sec. 78a et seq., as amended. An insurer required to file financial statements pursuant to this paragraph (e) may satisfy the request by providing the commissioner with the most recently filed parent corporation financial statements that have been filed with the securities and exchange commission. (f) Other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the commissioner; (g) Statements that the insurer's board of directors oversees corporate governance and internal controls and that the insurer's officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal control procedures; and (h) Any other information required by the commissioner by rule. (3) All registration statements must contain a summary outlining all items in the current registration statement representing changes from the prior registration statement. (4) No information need be disclosed on the registration statement filed pursuant to subsection (2) of this section if the information is not material for the purposes of this section. Unless the commissioner by rule or order provides otherwise, sales, purchases, exchanges, loans, extensions of credit, investments, or guarantees involving one-half of one percent or less of an Colorado Revised Statutes 2019 Page 245 of 943 Uncertified Printout insurer's admitted assets as of the thirty-first day of the preceding December are not material for purposes of this subsection (4). (5) Subject to section 10-3-805 (2), each registered insurer shall report to the commissioner all dividends and other distributions to shareholders within fifteen business days following the declaration of the dividends or distribution. (6) A person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer where the information is reasonably necessary to enable the insurer to comply with this part 8. (7) The commissioner shall terminate the registration of any insurer that demonstrates that it no longer is a member of an insurance holding company system. (8) The commissioner may require or allow two or more affiliated insurers subject to registration to file a consolidated registration statement. (9) The commissioner may allow an insurer that is authorized to do business in this state and that is part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subsection (1) of this section and to file all information and material required to be filed under this section. (10) This section does not apply to any insurer, information, or transaction if and to the extent that the commissioner by rule or order exempts it from this section. (11) A person, including an insurer or any member of an insurance holding company system, may file with the commissioner a disclaimer of affiliation with any authorized insurer. The disclaimer must fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. A disclaimer of affiliation shall be deemed to have been granted unless the commissioner, within thirty days following receipt of a complete disclaimer, notifies the filing party the disclaimer is disallowed. In the event of disallowance, the disclaiming party may request an administrative hearing, which the commissioner shall grant. The disclaiming party need not register under this section if approval of the disclaimer has been granted by the commissioner or if the disclaimer is deemed to have been approved. (12) The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report. The report must, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The controlling person shall file the report with the lead state commissioner of the insurance holding company system as determined by the procedures within the financial analysis handbook adopted by the NAIC. (13) The failure to file a registration statement or any summary of the registration statement or enterprise risk filing required by this section within the time specified for filing is a violation of this section. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1338, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-804 as it existed prior to 2014. 10-3-805. Standards and management of an insurer within an insurance holding company system. (1) Transactions within an insurance holding company system. (a) Colorado Revised Statutes 2019 Page 246 of 943 Uncertified Printout Transactions within an insurance holding company system to which an insurer subject to registration is a party are subject to the following standards: (I) The terms must be fair and reasonable; (II) Agreements for cost-sharing services and management must include such provisions as required by rules issued by the commissioner; (III) Charges or fees for services performed must be reasonable; (IV) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied; (V) The books, accounts, and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and (VI) The insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates must be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs. (b) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, that are subject to any materiality standards contained in subparagraphs (I) to (VII) of this paragraph (b), shall not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into the transaction at least thirty days before entering into the transaction, or such shorter period as the commissioner may permit, and the commissioner has not disapproved it within that period: (I) Sales, purchases, exchanges, loans, extensions of credit, or investments, if the transactions are equal to or exceed: (A) With respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders as of the thirty-first day of the preceding December; or (B) With respect to life insurers, three percent of the insurer's admitted assets as of the thirty-first day of the preceding December; (II) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of, or make investments in, any affiliate of the insurer making the loans or extensions of credit if the transactions are equal to or exceed: (A) With respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders as of the thirty-first day of the preceding December; or (B) With respect to life insurers, three percent of the insurer's admitted assets as of the thirty-first day of the preceding December; (III) Reinsurance agreements or modifications, including: (A) All reinsurance pooling agreements; and (B) Agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three years, equals or exceeds five percent of the insurer's surplus as regards policyholders, as of the thirty-first day of the preceding December, including those agreements that may require as Colorado Revised Statutes 2019 Page 247 of 943 Uncertified Printout consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer; (IV) All management agreements, service contracts, tax allocation agreements, guarantees, and cost-sharing arrangements; (V) Guarantees when made by a domestic insurer; except that a guarantee that is quantifiable as to amount is not subject to the notice requirements of this subparagraph (V) unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the thirty-first day of the preceding December. Guarantees that are not quantifiable as to amount are subject to the notice requirements of this subparagraph (V). (VI) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with its present holdings in such investments, exceeds two and one-half percent of the insurer's surplus to policyholders; except that direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 103-802 or authorized under any other section of Colorado law, or in nonsubsidiary insurance affiliates that are subject to this part 8, are exempt from this requirement; and (VII) Any material transactions, specified by rule, that the commissioner determines may adversely affect the interests of the insurer's policyholders. (c) The notice for amendments or modifications specified in paragraph (b) of this subsection (1) must include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within thirty days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any. (d) Nothing in paragraph (b) of this subsection (1) authorizes or permits any transactions that, in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law. (e) A domestic insurer shall not enter into transactions that are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the commissioner determines that separate transactions were entered into over any twelve-month period for that purpose, the commissioner may exercise his or her authority under section 10-3-811. (f) The commissioner, in reviewing transactions pursuant to paragraph (b) of this subsection (1), shall consider whether the transactions comply with the standards set forth in paragraph (a) of this subsection (1) and whether they may adversely affect the interests of policyholders. (g) A domestic insurer shall notify the commissioner within thirty days after any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities. (2) Dividends and other distributions. (a) A domestic insurer shall not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until thirty days after the commissioner has received notice of the declaration of the dividend or distribution and has not within that period disapproved the payment, or until the commissioner has approved the payment within the thirty-day period. Colorado Revised Statutes 2019 Page 248 of 943 Uncertified Printout (b) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property whose fair market value, together with that of other dividends or distributions made within the preceding twelve months, exceeds the lesser of: (I) Ten percent of the insurer's surplus as regards policyholders as of the thirty-first day of the preceding December; or (II) The net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, not including realized capital gains, for the twelvemonth period ending the thirty-first day of the preceding December, but not including pro rata distributions of any class of the insurer's own securities. (c) In determining whether a dividend or distribution is extraordinary, an insurer other than a life insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carry-forward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediately preceding calendar years. (d) Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the commissioner's approval, and the declaration confers no rights upon shareholders until: (I) The commissioner has approved the payment of the dividend or distribution; or (II) The commissioner has not disapproved payment within the thirty-day period referred to in paragraph (a) of this subsection (2). (3) For purposes of this part 8, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs, the commissioner shall consider the following factors, among others: (a) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria; (b) The extent to which the insurer's business is diversified among several lines of insurance; (c) The number and size of risks insured in each line of business; (d) The extent of the geographical dispersion of the insurer's insured risks; (e) The nature and extent of the insurer's reinsurance program; (f) The quality, diversification, and liquidity of the insurer's investment portfolio; (g) The recent past and projected future trend in the size of the insurer's investment portfolio; (h) The surplus as regards policyholders maintained by other comparable insurers; (i) The adequacy of the insurer's reserves; (j) The quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the judgment of the commissioner the investment so warrants. (k) The quality of the insurer's earnings and the extent to which the reported earnings include extraordinary items, such as surplus relief reinsurance transactions; and (l) Any other situation not described in this subsection (3) that may render the operations of the insurer hazardous to the public or its policyholders. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1342, § 2, effective July 1. Colorado Revised Statutes 2019 Page 249 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-3-805 as it existed prior to 2014. 10-3-806. Examination. (1) Subject to the limitation contained in this section and in addition to the powers that the commissioner has under this title relating to the examination of insurers, the commissioner may examine any insurer registered under section 10-3-804 and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. (2) Access to books and records. (a) The commissioner may order any insurer registered under section 10-3-804 to produce such records, books, or other information papers in the possession of the insurer or its affiliates as are reasonably necessary to determine compliance with this section. (b) To determine compliance with this section, the commissioner may order any insurer registered under section 10-3-804 to produce information not in the possession of the insurer if the insurer can obtain access to the information pursuant to contractual relationships, statutory obligations, or other methods. If the insurer cannot obtain the information requested by the commissioner, the insurer shall provide the commissioner a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of the information. (3) The commissioner may retain, at the registered insurer's expense, such attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as are reasonably necessary to assist in the conduct of the examination under subsection (1) of this section. Each person so retained is under the direction and control of the commissioner and shall act in a purely advisory capacity. (4) Each registered insurer producing for examination records, books, and papers pursuant to subsection (1) of this section is liable for and shall pay the expense of examination in accordance with part 2 of article 1 of this title. (5) If the insurer fails to comply with an order, the commissioner may examine the affiliates to obtain the information. The commissioner may also issue subpoenas, administer oaths, and examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of any person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court. Every person shall attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. Witnesses not employed by the insurer shall be paid the same fees and mileage as are paid to witnesses in the courts of this state, which fees, mileage, and actual expenses, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, must be itemized by the commissioner and charged against, and be paid by, the company being examined. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1346, § 2, effective July 1. L. 2016: (5) added, (SB 16-029), ch. 32, p. 72, § 1, effective March 18. Editor's note: This section is similar to former § 10-3-806 as it existed prior to 2014. Colorado Revised Statutes 2019 Page 250 of 943 Uncertified Printout 10-3-807. Supervisory colleges. (1) With respect to any insurer registered under section 10-3-804, and in accordance with subsection (3) of this section, the commissioner may participate in a supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance by the insurer with this section. The powers of the commissioner with respect to supervisory colleges include the following: (a) Initiating the establishment of a supervisory college; (b) Clarifying the membership and participation of other supervisors in the supervisory college; (c) Clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor; (d) Coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and (e) Establishing a crisis management plan. (2) Each registered insurer subject to this section is liable for and shall pay the reasonable expenses of the commissioner's participation in a supervisory college in accordance with subsection (3) of this section, including reasonable travel expenses. For purposes of this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the commissioner may establish a regular assessment to the insurer for the payment of these expenses. (3) In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, and risk management and governance processes, and as part of the examination of individual insurers in accordance with section 10-3-806, the commissioner may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. The commissioner may enter into agreements, in accordance with section 10-3-808 (3), providing the basis for cooperation between the commissioner and the other regulatory agencies and the activities of the supervisory college. Nothing in this section delegates to the supervisory college the commissioner's authority to regulate or supervise the insurer or its affiliates within his or her jurisdiction. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1347, § 2, effective July 1. 10-3-807.5. Group-wide supervision of internationally active insurance groups information collection - cooperation - rules. (1) (a) The commissioner may act as the groupwide supervisor for any internationally active insurance group in accordance with this section. However, the commissioner, in cooperation with other state, federal, and international regulatory agencies, may designate or acknowledge another regulatory official as the group-wide supervisor for an internationally active insurance group that: (I) Does not have substantial insurance operations in the United States; (II) Has substantial insurance operations in the United States, but not in Colorado; or (III) Has substantial insurance operations in the United States and in Colorado, but the commissioner has determined pursuant to the factors set forth in subsections (2) and (6) of this section that the other regulatory official is the appropriate group-wide supervisor. Colorado Revised Statutes 2019 Page 251 of 943 Uncertified Printout (b) An insurance holding company system that does not qualify as an internationally active insurance group may request that the commissioner designate or acknowledge a groupwide supervisor pursuant to this section. (2) (a) When designating or acknowledging a group-wide supervisor pursuant to subsection (1) of this section, the commissioner shall consider the following factors: (I) The place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group's written premiums, assets, or liabilities; (II) The place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group; (III) The location of the executive offices or the largest operational offices of the internationally active insurance group; (IV) Whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the commissioner determines to be: (A) Substantially similar to the system of regulation provided under the laws of this state; or (B) Otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and (V) Whether another regulatory official acting or seeking to act as the group-wide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation. (b) The commissioner shall designate a regulatory official other than the commissioner to serve as the group-wide supervisor of an internationally active insurance group only: (I) After consideration of the factors listed in subsection (2)(a) of this section; (II) In cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group; and (III) In consultation with the internationally active insurance group. (3) Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the commissioner shall acknowledge that regulatory official as the group-wide supervisor. However, the commissioner shall make a new designation or acknowledgment as to the appropriate groupwide supervisor for the internationally active insurance group in the event of a material change that results in: (a) The internationally active insurance group's insurers domiciled in this state holding the largest share of the group's premiums, assets, or liabilities; or (b) This state being the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group. (4) Pursuant to section 10-3-806, the commissioner may collect from any insurer registered pursuant to section 10-3-804 all information necessary to determine whether the commissioner may act as the group-wide supervisor of an internationally active insurance group or acknowledge another regulatory official to act as the group-wide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to group-wide supervision by the commissioner, the commissioner shall notify the insurer and the ultimate controlling person within the internationally active insurance group of the pending determination. After receiving such notice, the internationally active insurance group has thirty days to provide the commissioner with additional information pertinent to the pending determination. The commissioner shall publish in the Colorado register and on the division's website the identity of Colorado Revised Statutes 2019 Page 252 of 943 Uncertified Printout internationally active insurance groups that the commissioner has determined are subject to group-wide supervision by the commissioner. (5) If the commissioner is the group-wide supervisor for an internationally active insurance group, the commissioner may engage in any of the following group-wide supervision activities: (a) Assess the enterprise risks within the internationally active insurance group to ensure that: (I) The material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and (II) Reasonable and effective mitigation measures are in place; (b) Request, from any member of an internationally active insurance group subject to the commissioner's supervision, information necessary and appropriate to assess enterprise risk, including information about the members of the internationally active insurance group regarding: (I) Governance, risk assessment, and management; (II) Capital adequacy; and (III) Material intercompany transactions; (c) Coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of the internationally active insurance group that are engaged in the business of insurance; (d) Communicate with other state, federal, and international regulatory agencies for members within the internationally active insurance group and share relevant information, subject to the confidentiality provisions of section 10-3-808, whether through supervisory colleges as set forth in section 10-3-807 or otherwise; (e) Enter into agreements with or obtain documentation from any insurer registered under section 10-3-804, any member of the internationally active insurance group, and any other state, federal, or international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the commissioner's role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation may not serve as evidence in any proceeding that an insurer or a person within an insurance holding company system, which insurer or person is not domiciled or incorporated in this state, is doing business in this state or is otherwise subject to jurisdiction in this state. (f) Other group-wide supervision activities, consistent with the authorities and purposes described in this subsection (5), as the commissioner considers necessary. (6) If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the group-wide supervisor, the commissioner may reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, so long as: (a) The commissioner's cooperation is in compliance with the laws of this state; and (b) The regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the commissioner's activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and Colorado Revised Statutes 2019 Page 253 of 943 Uncertified Printout cooperation is not reasonably reciprocal, the commissioner may refuse recognition and cooperation. (7) The commissioner may enter into agreements with or obtain documentation from any insurer registered under section 10-3-804, any affiliate of the insurer, or any other state, federal, or international regulatory agency for members of the internationally active insurance group, which agency provides the basis for or otherwise clarifies a regulatory official's role as groupwide supervisor. (8) The commissioner may promulgate rules necessary for the administration of this section. (9) A registered insurer subject to this section is liable for and shall pay the reasonable expenses of the commissioner's participation in the administration of this section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses. Source: L. 2019: Entire section added, (HB 19-1291), ch. 188, p. 2090, § 3, effective August 2. 10-3-808. Confidential treatment. (1) Documents, materials, or other information in the possession or control of the division that are obtained by or disclosed to the commissioner or any other person in the course of an examination or investigation made pursuant to section 10-3806 and all information reported pursuant to section 10-3-803 (2)(l) and (2)(m), 10-3-804, or 103-805 are confidential by law and privileged, are not subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer to which they pertain unless the commissioner, after giving the insurer and its affiliates who would be affected notice and opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication, in which event the commissioner may publish all or any part in such manner as the commissioner deems appropriate. (2) Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner or with whom the documents, materials, or other information are shared pursuant to this part 8 shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (1) of this section. (3) In order to assist in the performance of the commissioner's duties, the commissioner: (a) May share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subsection (1) of this section, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, including members of any supervisory college described in section 10-3-807, if the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information and has verified in writing the legal authority to maintain confidentiality; Colorado Revised Statutes 2019 Page 254 of 943 Uncertified Printout (b) Notwithstanding paragraph (a) of this subsection (3), shall share confidential and privileged documents, material, or information reported pursuant to section 10-3-804 (12) only with commissioners of states having statutes or regulations substantially similar to subsection (1) of this section and who have agreed in writing not to disclose such information; (c) May receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (d) Shall enter into written agreements with the NAIC governing the sharing and use of information provided pursuant to this part 8 consistent with this subsection (3) that must: (I) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC and its affiliates and subsidiaries pursuant to this part 8, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators; (II) Specify that ownership of information shared with the NAIC and its affiliates and subsidiaries pursuant to this part 8 remains with the commissioner and that the NAIC's use of the information is subject to the direction of the commissioner; (III) Require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC pursuant to this part 8 is subject to a request or subpoena to the NAIC for disclosure or production; and (IV) Require the NAIC and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries may be required to disclose confidential information about the insurer shared with the NAIC and its affiliates and subsidiaries pursuant to this part 8. (4) The sharing of information by the commissioner pursuant to this part 8 does not constitute a delegation of regulatory authority or rule-making, and the commissioner is solely responsible for the administration, execution, and enforcement of this part 8. (5) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information occurs as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (3) of this section. (6) Documents, materials, or other information in the possession or control of the NAIC pursuant to this part 8 are confidential by law and privileged, are not subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1348, § 2, effective July 1. Editor's note: Subsection (1) is similar to former § 10-3-807 as it existed prior to 2014. 10-3-809. Rules. The commissioner may, upon notice and opportunity for all interested persons to be heard, issue such rules and orders as are necessary to carry out this part 8. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1350, § 2, effective July 1. Colorado Revised Statutes 2019 Page 255 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-3-808 as it existed prior to 2014. 10-3-810. Injunctions - prohibitions against voting securities - sequestration of voting securities. (1) Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent of an insurer has committed or is about to commit a violation of this part 8 or of any rule or order issued by the commissioner under this part 8, the commissioner may apply to the district court for the county in which the principal officer of the insurer is located or, if the insurer has no office in this state, then to the district court for the city and county of Denver, for an order enjoining the insurer or director, officer, employee, or agent from violating or continuing to violate this part 8 or any rule or order, and for such other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors, and shareholders or the public may require. (2) (a) A security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of this part 8 or of any rule or order issued by the commissioner under this part 8 shall not be voted at any shareholder's meeting or counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though the securities were not issued and outstanding; but an action taken at any such meeting shall not be invalidated by the voting of the securities unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. (b) If an insurer or the commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of this part 8 or of any rule or order issued by the commissioner under this part 8, the insurer or the commissioner may apply to the district court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement, or acquisition made in contravention of section 10-3-803 or any rule or order issued by the commissioner under section 10-3-803 to enjoin the voting of any security so acquired, to void any vote of the security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors, and shareholders or the public may require. (3) If a person has acquired or is proposing to acquire any voting securities in violation of this part 8 or any rule or order issued by the commissioner under this part 8, the district court for the county in which the insurer has its principal place of business may, on such notice as the court deems appropriate, upon the application of the insurer or the commissioner, seize or sequester any voting securities of the insurer owned directly or indirectly by the person and issue such order as may be appropriate to effectuate this part 8. Notwithstanding any other provision of law, for the purposes of this part 8, the situs of the ownership of the securities of domestic insurers is deemed to be in this state. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1350, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-809 as it existed prior to 2014. 10-3-811. Criminal proceedings - civil penalties - definition. (1) Whenever it appears to the commissioner that an insurer or a director, officer, employee, or agent thereof has committed a willful violation of this part 8, the commissioner may cause criminal proceedings to Colorado Revised Statutes 2019 Page 256 of 943 Uncertified Printout be instituted in the district court for the county in which the principal office of the insurer is located or, if such insurer has no such office in this state, in the district court for the city and county of Denver against such insurer or the insurer's responsible director, officer, employee, or agent. An insurer or individual that willfully violates this part 8 commits a class 6 felony and shall be punished as provided in section 18-1.3-401, C.R.S. (2) (a) An insurer or an insurer's director, officer, employee, or agent that fails, without just cause, to file any registration statement, amendment, or notice of shareholder distribution as required in this part 8 may be required, after notice and hearing, to pay a civil penalty of not more than five thousand dollars for each violation. Each violation is a separate offense. The commissioner shall issue an order setting forth the amount of the civil penalty, which amount must be based on the alleged violator's history of previous violations, the good faith of the alleged violator in attempting to achieve rapid compliance after notification of the violation, the gravity and willfulness of the violation, the potential deterrent effect of the civil penalty, and such other considerations as may be specified by the commissioner. The commissioner may compromise, mitigate, or remit any such civil penalty. (b) For purposes of this subsection (2), "civil penalty" means any monetary penalty levied against an insurer or an insurer's director, officer, employee, or agent because of a violation of this part 8. "Civil penalty" does not include any criminal penalty levied under subsection (1) of this section. (c) The commissioner shall transmit all civil penalties collected pursuant to this subsection (2) to the state treasurer, who shall credit them to the general fund. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1351, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-810 as it existed prior to 2014. 10-3-812. Receivership. Whenever it appears to the commissioner that any person has committed a violation of this part 8 that so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders, or the public, the commissioner may proceed as provided in part 4 or 5 of this article. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1352, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-811 as it existed prior to 2014. 10-3-813. Revocation, suspension, or nonrenewal of insurer's license. Whenever it appears to the commissioner that a person has committed a violation of this part 8 that makes the continued operation of an insurer contrary to the interests of policyholders or the public, the commissioner may, after giving notice and an opportunity to be heard, suspend, revoke, or refuse to renew the insurer's license or authority to do business in this state for such period as the commissioner finds is required for the protection of policyholders or the public. The determination must be accompanied by specific findings of fact and conclusions of law. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1352, § 2, effective July 1. Colorado Revised Statutes 2019 Page 257 of 943 Uncertified Printout Editor's note: This section is similar to former § 10-3-812 as it existed prior to 2014. 10-3-814. Judicial review - mandamus. (1) A person aggrieved by an act, determination, rule, order, or other action of the commissioner pursuant to this part 8 may appeal the action to the district court for the city and county of Denver. The court shall conduct its review without a jury and by trial de novo; except that, if all parties, including the commissioner, so stipulate, the review shall be confined to the record. Portions of the record may be introduced by stipulation into evidence in a trial de novo as to those parties so stipulating. (2) The filing of an appeal pursuant to this section stays the application of the act, rule, order, or other action of the commissioner to the appealing party unless the court, after giving the parties notice and an opportunity to be heard, determines that a stay would be detrimental to the interests of policyholders, shareholders, creditors, or the public. (3) A person aggrieved by a failure of the commissioner to act or make a determination required by this part 8 may petition the district court for the city and county of Denver for an action in the nature of a mandamus or a peremptory mandamus directing the commissioner to act or make such determination forthwith. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1352, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-813 as it existed prior to 2014. 10-3-815. Recovery of distributions or payments. (1) Subject to the limitations of this section, where a distribution or payment pursuant to paragraph (a) or (b) of this subsection (1) is made at any time during the one year preceding a petition for liquidation, conservation, or rehabilitation, as the case may be, if an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order may recover on behalf of the insurer: (a) From any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions other than distributions of shares of the same class of stock paid by the insurer on its capital stock; or (b) Any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer, or employee. (2) A distribution is not recoverable if the parent or affiliate shows that, when paid, the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations. (3) A person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distributions were paid is liable up to the amount of distributions or payments under subsection (1) of this section that the person received. A person who otherwise controlled the insurer at the time the distributions were declared is liable up to the amount of distributions that would have been received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they are jointly and severally liable. (4) The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations Colorado Revised Statutes 2019 Page 258 of 943 Uncertified Printout of the impaired or insolvent insurer and to reimburse the Colorado insurance guaranty association, as that term is defined in section 10-3-502 (9). (5) To the extent that a person liable under subsection (3) of this section is insolvent or otherwise fails to pay claims due from it, its parent corporation, holding company, or a person who otherwise controlled it at the time the distribution was paid is jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation, holding company, or person who otherwise controlled it. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1353, § 2, effective July 1. Editor's note: This section is similar to former § 10-3-814 as it existed prior to 2014. 10-3-816. Conflict with other laws. All laws and parts of laws of this state inconsistent with this part 8 are hereby superseded with respect to matters covered by this part 8. Source: L. 2014: Entire part R&RE, (SB 14-152), ch. 312, p. 1354, § 2, effective July 1. PART 9 UNAUTHORIZED INSURANCE 10-3-901. Short title. This part 9 shall be known and may be cited as the "Regulation of Unauthorized Insurance Act". Source: L. 67: p. 873, § 10. C.R.S. 1963: § 72-25-10. 10-3-902. Legislative declaration. The purpose of this part 9 is to subject certain persons and insurers to the jurisdiction of the commissioner, of proceedings before the commissioner, and of the courts of this state in suits. The general assembly declares that it is a subject of concern that many residents of this state hold policies of insurance issued by persons and insurers not authorized to do insurance business in this state, thus presenting to such residents the often insuperable obstacle of asserting their legal rights under such policies in forums foreign to them under laws and rules of practice with which they are not familiar and are deprived of the benefit of Colorado laws regulating insurance. The general assembly declares that it is also concerned with the protection of residents of this state against acts by persons and insurers not authorized to do an insurance business in this state by the maintenance of fair and honest insurance markets; by protecting the premium tax revenues of this state; by protecting authorized persons and insurers, which are subject to strict regulation, from unfair competition by unauthorized persons and insurers; and by protecting against the evasion of the insurance regulatory laws of this state. In furtherance of such state interest, the general assembly in this part 9 exercises its power to protect residents of this state and to define what constitutes transacting insurance business in this state. Source: L. 67: p. 868, § 1. C.R.S. 1963: § 72-25-1. Colorado Revised Statutes 2019 Page 259 of 943 Uncertified Printout 10-3-903. Definition of transacting insurance business. (1) Any of the following acts in this state, effected by mail or otherwise, by an unauthorized insurer constitute transacting insurance business in this state as the term is used in section 10-3-105: (a) The making of, or proposing to make, as an insurer, an insurance contract; (b) The making of, or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety; (c) The taking or receiving of any application for insurance; (d) The receiving or collection of any premium, commission, membership fees, assessments, dues, or other consideration for any insurance or any part thereof; (e) The issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state; (f) Directly or indirectly acting as an agent for or otherwise representing, or aiding on behalf of another, any person or insurer in the solicitation, negotiation, procurement, or effectuation of insurance or renewals thereof; or in the dissemination of information as to coverage or rates; or in the forwarding of applications; or in the delivery of policies or contracts; or in the inspection of risks; or in the fixing of rates; or in the investigation or adjustment of claims or losses; or in the transaction of matters subsequent to the effectuation of the contract and arising out of it; or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located, or to be performed in this state. The provisions of this paragraph (f) shall not operate to prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance on behalf of such employer. (g) The doing of any kind of insurance business specifically recognized as constituting the doing of an insurance business within the meaning of the statutes relating to insurance; (h) The doing, or proposing to do, any insurance business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the statutes; (i) Any other transactions of business in this state by an insurer; (j) Funding, either directly or indirectly, the cash qualification bond of a cash-bonding agent or professional cash-bail agent when the means do not constitute an arm's-length transaction under reasonable commercial standards or where the agreement to repay is contingent on the volume or value of the bonds posted; (k) Except for payments from the defendant or a third-party indemnitor who applied for the bond, paying, either directly or indirectly, for the forfeiture of a bail bond posted by a cashbonding agent or professional cash-bail agent when the payment is made by a person other than the cash-bonding agent or professional cash-bail agent that posted the bail bond. (2) This section does not apply to: (a) The lawful transaction of surplus lines insurance; (b) The lawful transaction of reinsurance by insurers; (c) Transactions in this state involving a policy lawfully solicited, written, and delivered outside of this state covering only subjects of insurance not resident, located, or expressly to be performed in this state at the time of issuance, and which transactions are subsequent to the issuance of such policy; Colorado Revised Statutes 2019 Page 260 of 943 Uncertified Printout (d) Transactions involving contracts of insurance independently procured through negotiations occurring entirely outside of this state which are reported and on which premium tax is paid; (e) Attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses; (f) Transactions in this state involving group life or group annuities where the master policy of such groups was lawfully issued and delivered in a state in which the company was authorized to do an insurance business; (g) The transaction of business by a home warranty service company pursuant to part 9 of article 10 of title 12; (h) Transactions in this state involving group sickness and accident or blanket sickness and accident insurance where the master policy was lawfully issued and delivered to a single employer in another state in which the company was authorized to do an insurance business, when a master policy which covers residents of this state includes mammography benefits at a level at least as comprehensive as those required by section 10-16-104 (18)(b)(III); (i) Any transaction in this state involving the issuance of a charitable gift annuity, as defined in section 10-1-102 (4); (j) The sale of authorized insurance by agents of a motor vehicle rental company if such sale complies with the limitations set forth in section 10-2-105 (2)(g); (k) Repealed. (l) A person licensed as a cash-bonding agent or professional cash-bail agent under article 23 of this title, unless the person engages in conduct described in subsection (1) of this section. Source: L. 67: p. 868, § 2. C.R.S. 1963: § 72-25-2. L. 79: (2)(g) added, p. 582, § 2, effective June 7. L. 91: (2)(f) amended and (2)(h) added, p. 1213, § 6, effective July 1. L. 92: (2)(h) amended, p. 1750, § 1, effective May 29; (2)(h) amended, p. 1750, § 2, effective July 1. L. 95:(2)(i) added, p. 218, § 2, effective April 17. L. 98: (2)(j) added, p. 234, § 4, effective April 10. L. 2001: (2)(j) amended, p. 1213, § 37, effective January 1, 2002. L. 2003: (2)(i) amended, p. 617, § 11, effective July 1; (2)(k) added, p. 1784, § 15, effective July 1. L. 2006: (2)(k) amended, p. 1998, § 31, effective July 1. L. 2009: (2)(h) amended, (HB 09-1204), ch. 344, p. 1806, § 3, effective January 1, 2010. L. 2012: IP(1) amended and (1)(j), (1)(k), and (2)(l) added, (HB 12-1266), ch. 280, p. 1507, § 36, effective July 1. L. 2015: IP(2) and (2)(g) amended, (HB 15-1223), ch. 81, p. 235, § 6, effective August 5. L. 2018: (2)(k) repealed, (HB 18-1431), ch. 313, p. 1891, § 7, effective August 8. L. 2019: (2)(g) amended, (HB 19-1172), ch. 136, p. 1651, § 32, effective October 1. Cross references: (1) For reinsurance, see part 7 of this article; for surplus line insurance, see article 5 of this title. (2) For the legislative declaration contained in the 1998 act enacting subsection (2)(j), see section 1 of chapter 88, Session Laws of Colorado 1998. For the legislative declaration contained in the 2009 act amending subsection (2)(h), see section 1 of chapter 344, Session Laws of Colorado 2009. Colorado Revised Statutes 2019 Page 261 of 943 Uncertified Printout 10-3-903.5. Jurisdiction over providers of health care benefits. (1) Notwithstanding any other provision of law, and except as provided in this section, any person or other entity which provides coverage in this state for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric expenses, whether such coverage is by direct payment, reimbursement, or otherwise, shall be presumed to be subject to the jurisdiction of the division of insurance, unless such person or entity shows that while providing such services it is subject to the jurisdiction of another agency of this state, any subdivisions thereof, or the federal government. (2) A person or other entity may show that it is subject to the jurisdiction of another agency of this state, any subdivision thereof, or the federal government, by providing to the insurance commissioner the appropriate certificate, license, or other document issued by the other governmental agency which permits or qualifies it to provide those services. Nothing in this section shall be construed to in any way limit the ability of the division of insurance to regulate insurance companies, multiple employer trusts, multiple employer welfare arrangements, association health plans, or preferred provider organizations. (3) Any person or other entity which is unable to show under subsection (2) of this section that it is subject to the jurisdiction of another agency of this state, any subdivision thereof, or the federal government, shall submit to an examination by the insurance commissioner to determine the organization and solvency of the person or the entity, and to determine whether such person or entity complies with the applicable provisions of this article. (4) Any person or other entity unable to show that it is subject to the jurisdiction of another agency of this state, any subdivision thereof, or the federal government, shall be subject to all appropriate provisions of this article regarding the conduct of its business. (5) Any production agency or administrator which advertises, sells, transacts, or administers the coverage in this state described in subsection (1) of this section and which is required to submit to an examination by the insurance commissioner under subsection (3) of this section, shall, if said coverage is not fully insured or otherwise fully covered by an admitted sickness and accident insurer, nonprofit hospital, medical, surgical, and health service corporation, prepaid dental care plan, or health maintenance organization, advise every purchaser, prospective purchaser, and covered person of such lack of insurance or other coverage. (6) Any administrator which advertises or administers the coverage in this state described in subsection (1) of this section and which is required to submit to an examination by the insurance commissioner under subsection (3) of this section, shall advise any production agency of the elements of the coverage, including the amount of "stop-loss" insurance in effect. (7) (a) The provisions of this section and any other laws of this state that regulate insurance or insurance companies shall not apply to any multiple employer health trust which meets the requirements of paragraph (b) of this subsection (7) or any multiple employer welfare arrangement which meets the requirements of paragraph (c) of this subsection (7). Any such trust or arrangement shall be subject to the requirements of this subsection (7) and section 10-3-1104. The exemption provided by this subsection (7) shall not apply to any entity if the division of insurance determines that its operation is hazardous to the public or to individuals receiving benefits. (b) A multiple employer health trust is any trust that is: Colorado Revised Statutes 2019 Page 262 of 943 Uncertified Printout (I) Sponsored, maintained, and funded by one or more entities of state government or political subdivisions of the state organized pursuant to state law and is for the benefit of the entity's employees, including a multiple employer health trust established for the purposes of part 3 or 4 of article 5 of title 29; or (II) Established and maintained pursuant to the provisions of a collective bargaining agreement between one or more unions and employers or an association of employers for the benefit of employees who are covered by such agreement, and pursuant to which health benefits, wages, pension benefits, and other terms of employment have been bargained for in good faith and the sponsoring union provides services and benefits to its members other than health benefits. (c) A multiple employer welfare arrangement is any arrangement which complies with the following requirements: (I) The multiple employer welfare arrangement shall have been in existence continuously since at least January 1, 1983, and shall maintain unallocated reserves of not less than five percent of the first two million dollars of annual contributions made to such arrangement in the preceding year. (II) The multiple employer welfare arrangement shall file its annual financial statement with the division within sixty days after the end of its fiscal year to demonstrate that the required reserves are being maintained, and it shall file its audited financial statement with the division within the time period that insurance companies are required to file such statements. (III) The multiple employer welfare arrangement shall file an actuarial opinion with the division which states that the reserves and the contribution and funding levels of the arrangement are adequate and which includes the underlying actuarial report in support of the opinion in accordance with the requirements of section 10-7-114, and such arrangement shall file such opinion and report within the time period that insurance companies are required to file such actuarial opinion. (IV) The multiple employer welfare arrangement shall provide benefits which are in substantial compliance with the mandated benefit provisions that are applicable to insurers offering health insurance coverage in this state. (V) The multiple employer welfare arrangement shall be sponsored and maintained by an association which: (A) Has within its membership the employers who participate in and fund the arrangement; (B) Is engaged in substantial activities for its employer members, other than the sponsorship of an employee welfare benefit plan, and provides business or professional assistance and benefits to its members who share a common business interest and are primarily engaged in the same trade or business; and (C) Has been in existence for a period of at least ten years. Source: L. 91: Entire section added, p. 1206, § 3, effective July 1. L. 93: (7) added, p. 256, § 1, effective March 31. L. 2014: IP(7)(b) and (7)(b)(I) amended, (SB 14-172), ch. 325, p. 1427, § 2, effective January 1, 2015. L. 2017: (7)(b)(I) amended, (SB 17-214), ch. 187, p. 684, § 4, effective May 3. Colorado Revised Statutes 2019 Page 263 of 943 Uncertified Printout 10-3-904. Commissioner may enjoin unauthorized company. Whenever the commissioner of insurance believes, from evidence satisfactory to him, that any foreign or alien company is violating the provisions of section 10-3-105 and this part 9, the commissioner may, through the attorney general of this state, cause a complaint to be filed in the district court in and for the city and county of Denver to enjoin and restrain such company from continuing such violation or engaging therein or doing any act in furtherance thereof. The court has jurisdiction of the proceeding and has the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper. Source: L. 67: p. 869, § 3. C.R.S. 1963: § 72-25-3. 10-3-904.5. Emergency cease-and-desist orders - issuance. (1) The commissioner may issue an emergency cease-and-desist order ex parte if: (a) The commissioner believes that an unauthorized person is engaging in the business of insurance in violation of the provisions of section 10-3-105 or 10-3-903 or is in violation of a rule promulgated by the commissioner; and (b) It appears to the commissioner that the alleged conduct is fraudulent, creates an immediate danger to the public safety, or is causing or can be reasonably expected to cause significant, imminent, and irreparable public injury. (2) For purposes of subsection (1) of this section, "unauthorized person" means any individual, corporation, association, partnership, or other natural or artificial person that directly or indirectly engages in the transaction of insurance business as described in section 10-3-903, except as such business may be engaged in in accordance with specific authorization in this title. (3) Upon making a determination under subsection (1) of this section that an emergency cease-and-desist order should be issued, the commissioner shall serve on the person who is the subject of the order, by registered or certified mail, return receipt requested, at such person's last known address, an order that contains a statement of the charges and requires such person to immediately cease and desist from the acts, methods, or practices stated in the order. (4) The division of insurance shall promulgate reasonable rules necessary to carry out the provisions of this section and sections 10-3-904.6 and 10-3-904.7. Such rules shall include, to the extent possible, provisions requiring uniformity with respect to the procedures of this state and other states, the United States, and the national association of insurance commissioners. Source: L. 93: Entire section added, p. 334, § 1, effective July 1. 10-3-904.6. Emergency cease-and-desist orders - hearings - judicial review violations. (1) Any person who is the subject of an emergency cease-and-desist order may contest such order by requesting an immediate hearing before the commissioner, pursuant to section 24-4-105 (12), C.R.S., at which such person shall have the opportunity to show cause why the order should not be affirmed or upheld. Any immediate hearing requested by a person against whom an emergency cease-and-desist order has been issued pursuant to the provisions of this section shall be held in accordance with the requirements of article 4 of title 24, C.R.S. The commissioner shall have all of the powers provided in such article for the party conducting the hearing. Colorado Revised Statutes 2019 Page 264 of 943 Uncertified Printout (2) Upon good cause shown the commissioner shall permit any person to intervene, appear, and be heard at the hearing, either in person or through counsel. (3) Following the hearing the commissioner shall affirm, modify, or set aside, in whole or in part, the emergency cease-and-desist order. (4) Any person adversely affected by the commissioner's decision may appeal such decision by filing an action for judicial review in the court of appeals pursuant to the provisions of section 24-4-106 (11), C.R.S. Any appeal made pursuant to the provisions of this subsection (4) shall not operate to stay or vacate a decision or order of the commissioner unless the court issues an order that specifically stays or vacates the order or decision. The commissioner may recover reasonable attorney fees if judicial action is necessary to enforce an order made pursuant to section 10-3-904.5. (5) The commissioner shall be responsible for determining whether an emergency ceaseand-desist order has been violated and may conduct a hearing pursuant to the procedures in section 24-4-105, C.R.S., to assist in making such determination. If the commissioner determines that a violation has occurred, notice of a hearing shall be mailed by the commissioner to the alleged violator's last known address. Such notice shall contain the time, date, and place of the hearing to be held for the purpose of eliciting further information. Hearings shall not be held before the twenty-first day after the date the notice is sent. The notice shall contain a statement of the facts or conduct alleged to be in violation of the emergency cease-and-desist order. If after a hearing the commissioner determines that an emergency cease-and-desist order has been violated the commissioner may: (a) Impose a civil penalty of twenty-five thousand dollars for each act of violation; (b) Direct the person against whom the order was issued to make complete restitution, in the form and amount and within the period determined by the commissioner, to all state residents, insureds, and entities operating in this state that were damaged by the violation or failure to comply; or (c) Impose the penalty described in paragraph (a) of this subsection (5) and direct restitution pursuant to the provisions of paragraph (b) of this subsection (5). (6) Any person adversely affected by an order issued by the commissioner pursuant to subsection (5) of this section may appeal such order by commencing an action for judicial review in the court of appeals pursuant to section 24-4-106 (11), C.R.S. Any such action shall be commenced no later than the twentieth day after the date of the order. The division may recover reasonable attorney fees if judicial action is necessary for enforcement of the commissioner's order. Source: L. 93: Entire section added, p. 334, § 1, effective July 1. 10-3-904.7. Failure to pay penalties or restitution. (1) If a person fails to pay a penalty or make complete restitution as directed by the commissioner under section 10-3-904.6 (5)(a) or (5)(b), the commissioner may: (a) Refer the matter to the attorney general for enforcement; or (b) Cancel or revoke any permit, license, certificate of authority, certificate, registration, or other authorization issued to such person. Source: L. 93: Entire section added, p. 334, § 1, effective July 1. Colorado Revised Statutes 2019 Page 265 of 943 Uncertified Printout 10-3-905. Service of process upon unauthorized company. (1) Any act of entering into a contract of insurance as an insurer, or transacting insurance business in this state, as such term is defined by section 10-3-903, by an unauthorized foreign or alien company is equivalent to and constitutes an appointment by such company of the commissioner to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it arising out of a violation of this part 9, or any action which may arise under the terms of this part 9, and the performance of one or more of such acts is signification of its agreement that any such process against it which is so served is of the same legal force and validity as if served upon the company. (2) (a) Service of such process shall be made by delivering and leaving with the commissioner two copies thereof and the payment to the commissioner of a fee of ten dollars. The commissioner shall promptly mail by certified mail one of the copies of such process to such company at its last known principal place of business and shall keep a record of all process so served upon the commissioner. Such process is sufficient service upon such company if notice of such service and a copy of the process are, within ten days thereafter, sent by certified mail, by or on behalf of the commissioner, to such company at its last-known principal place of business, and the return receipt of the company or, in the event the company refuses to accept such certified mail, the certified mail with its refusal thereon and the affidavit of compliance herewith by or on behalf of the commissioner is filed with the clerk of the court in which such action or proceeding is pending. The date of filing of the return receipt or refusal and affidavit of compliance constitutes the effective date of service and sufficient proof thereof. (b) Notwithstanding the amount specified for the fee in paragraph (a) of this subsection (2), the commissioner by rule or as otherwise provided by law may reduce the amount of the fee if necessary pursuant to section 24-75-402 (3), C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of the fee is credited. After the uncommitted reserves of the fund are sufficiently reduced, the commissioner by rule or as otherwise provided by law may increase the amount of the fee as provided in section 24-75-402 (4), C.R.S. (3) The court in any action or proceeding in which service is made in the manner provided in subsection (2) of this section may, in its discretion, order such postponement as may be necessary to afford such company reasonable opportunity to defend such action or proceeding. (4) Nothing in this section is to be construed to prevent an unauthorized foreign or alien company from filing a motion to quash a writ or to set aside service thereof made in the manner provided in subsection (2) of this section on the ground that such unauthorized company has not done any of the acts referred to in section 10-3-903. (5) No judgment by default shall be entered in any such action or proceeding until the expiration of thirty days from the date of the filing of the affidavit of compliance. (6) Nothing in this section shall limit or affect the right to serve any process, notice, or demand required or permitted by law to be served upon any company in any other manner permitted by law. Source: L. 67: p. 870, § 4. C.R.S. 1963: § 72-25-4. L. 71: p. 731, § 1. L. 86: (2) amended, p. 555, § 5, effective July 1. L. 89: (2) amended, p. 437, § 7, effective July 1. L. 98: (2) amended, p. 1326, § 27, effective June 1. Colorado Revised Statutes 2019 Page 266 of 943 Uncertified Printout 10-3-906. Validity of insurance contracts - liability under insurance contract. (1) The failure of a company transacting insurance business in Colorado to obtain a certificate of authority shall not impair the validity of any act or contract of such company and shall not prevent such company from defending any action in any court of this state. (2) In event of failure of any such unauthorized insurer to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of such insurance contract is also liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of such insurance contract. Source: L. 67: p. 870, § 5. C.R.S. 1963: § 72-25-5. 10-3-907. Investigation and disclosure of insurance contracts. (1) Whenever the commissioner has reason to believe that insurance has been effectuated by or for any person in this state with an unauthorized insurer, the commissioner shall in writing order such person to produce for examination all insurance contracts and other documents evidencing insurance with both authorized and unauthorized insurers and to disclose to the commissioner the amount of insurance, name and address of each insurer, gross amount of premium paid or to be paid, and the name and address of the person assisting or aiding in the solicitation, negotiation, or effectuation of such insurance. (2) Every person who, for thirty days after such written order pursuant to subsection (1) of this section, neglects to comply with the requirements of such order or who willfully makes a disclosure that is untrue, deceptive, or misleading shall forfeit fifty dollars, and an additional fifty dollars for each day of neglect after expiration of said thirty days. Source: L. 67: p. 871, § 6. C.R.S. 1963: § 72-25-6. 10-3-908. Reporting of unauthorized insurance. (1) Every person investigating or adjusting any loss or claim on a subject of insurance in this state shall immediately report to the commissioner every insurance policy or contract which has been entered into by any insurer not authorized to transact such insurance business in this state. (2) Every person acting in the capacity of insurance adviser, counselor, or analyst shall report to the commissioner every insurance policy or contract covering a subject of insurance in this state which has been entered into by an insurer not authorized to transact such insurance business in this state. (3) This section does not apply to transactions in this state involving a policy lawfully solicited, written, and delivered outside of this state covering only subjects of insurance not resident, located, or expressly to be performed in this state at the time of issuance, and which transactions are subsequent to the issuance of such policy. Source: L. 67: p. 871, § 7. C.R.S. 1963: § 72-25-7. 10-3-909. Unauthorized insurance premium tax. (1) Except as to premiums that are subject to a federal premium, excise, or stamp tax equal to or in excess of two and one-fourth percent of net premiums, and except as to premiums on independently procured insurance on Colorado Revised Statutes 2019 Page 267 of 943 Uncertified Printout which tax has been paid pursuant to section 10-3-209, 10-5-111, or 10-5-111.5, every insured under a contract procured from an unauthorized insurer shall pay to the division of insurance before March 1 next succeeding the calendar year in which the insurance was so effectuated, continued, or renewed a premium tax of two and one-quarter percent of net premiums charged for the insurance. Such insurance on subjects resident, located, or to be performed in this state procured through negotiations or an application, in whole or in part occurring or made within or from within or outside of this state, or for which premiums in whole or in part are remitted directly or indirectly from within or outside of this state, is deemed to be insurance procured, continued, or renewed in this state. The term "premium" includes all premiums, membership fees, assessments, dues, and any other consideration for insurance. If the tax prescribed by this section is not paid within the time stated, the tax is increased by a penalty of twenty-five percent and by the amount of an additional penalty computed at the rate of one percent per month or any part thereof from the date the payment was due to the date paid. (2) If a policy covers risks or exposures only partially in this state, the tax payable shall be computed on the portions of the premium which are properly allocable to the risks or exposures located in this state. (3) Proration of premium taxes due from an industrial insured under a contract procured from an unauthorized insurer having property in states other than Colorado shall be determined by rules and regulations promulgated by the commissioner using the following criteria where applicable: (a) Percentage of physical assets in Colorado; (b) Percentage of employee payroll in Colorado; (c) Percentage of sales in Colorado; (d) Percentage of taxable income reportable in Colorado. Source: L. 67: p. 871, § 8. C.R.S. 1963: § 72-25-8. L. 2012: (1) amended, (HB 121215), ch. 104, p. 354, § 6, effective August 8. 10-3-910. Application of this part 9. (1) Other than section 10-3-909, this part 9 shall not apply to any insurance company or underwriter issuing contracts of insurance to industrial insureds nor to any contract of insurance issued to any one or more industrial insureds. (2) For purposes of this section, an "industrial insured" is: (a) An insured who procures the insurance of any risk other than life and annuity contracts by use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant who does not receive a commission or compensation for placing the risk; and (b) An insured whose aggregate annual premiums for insurance on all risks total at least one hundred thousand dollars; and (c) An insured having at least one hundred full-time employees. (3) This part 9 shall not apply to any life insurance company organized and operated, without profit to any private shareholder or individual, exclusively for the purpose of aiding educational or scientific institutions organized and operated without profit to any private shareholder or individual by issuing insurance and annuity contracts directly from the home office of the company and without agents or representatives in this state only to or for the benefit of such institutions and to individuals engaged in the services of such institutions, nor to any Colorado Revised Statutes 2019 Page 268 of 943 Uncertified Printout policy or contract which it issues; but this exemption is conditioned upon any such company complying with the following requirements: (a) Payment of an annual registration fee of five thousand dollars; except that the commissioner by rule or as otherwise provided by law may reduce the amount of the fee if necessary pursuant to section 24-75-402 (3), C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of the fee is credited. After the uncommitted reserves of the fund are sufficiently reduced, the commissioner by rule or as otherwise provided by law may increase the amount of the fee as provided in section 24-75-402 (4), C.R.S. (b) Filing a copy of any policy or contract issued to Colorado residents with the commissioner; (c) Filing a copy of its annual statement prepared pursuant to the laws of its state of domicile, as well as such other financial material as may be requested with the commissioner; and (d) Providing, in such form as may be acceptable to the commissioner, for the appointment of the commissioner as its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against such company arising out of any policy or contract it has issued to, or which is currently held by, a Colorado citizen, and process so served against such company shall have the same force and validity as if served upon the company. Source: L. 67: p. 872, § 9. C.R.S. 1963: § 72-25-9. L. 95: (2) amended, p. 497, § 19, effective May 16. L. 98: (3)(a) amended, p. 1326, § 28, effective June 1. PART 10 UNAUTHORIZED INSURERS PROCESS ACT 10-3-1001. Short title. This part 10 shall be known and may be cited as the "Unauthorized Insurers Process Act". Source: L. 55: p. 478, § 6. CRS 53: § 72-19-5. C.R.S. 1963: § 72-18-5. 10-3-1002. Legislative declaration. The purpose of this part 10 is to subject certain insurers to the jurisdiction of courts of this state in suits by or on behalf of insureds or beneficiaries under insurance contracts. The general assembly declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such state interest, the general assembly provides in this part 10 a method of substituted service of process upon such insurers and declares that in so doing it exercises its power to protect its residents and to define, for the purpose of this part 10, what constitutes doing business in this state, and also exercises powers and privileges available to the state by virtue of Public Law 15, 79th Congress of the United States, Chapter 20, 1st Sess., S. 340, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states. Colorado Revised Statutes 2019 Page 269 of 943 Uncertified Printout Source: L. 55: p. 475, § 1. CRS 53: § 72-19-1. C.R.S. 1963: § 72-18-1. 10-3-1003. Service of process upon unauthorized insurer. (1) Any of the following acts in this state, effected by mail or otherwise, by an unauthorized foreign or alien insurer: The issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business therein; the solicitation of applications for such contracts; the collection of premiums, membership fees, assessments, or other considerations for such contracts; or any other transaction of insurance business, is equivalent to and constitutes an appointment by such insurer of the commissioner and his successor in office to be its true and lawful attorney, upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contract of insurance; and any such act shall be signification of its agreement that such service of process is of the same legal force and validity as personal service of process in this state upon such insurer. (2) Such service of process shall be made by delivering to and leaving with the commissioner or some person in apparent charge of his office two copies thereof and the payment to him of ten dollars which shall be taxed as part of costs of the proceeding. The commissioner shall forthwith mail by certified mail one of the copies of such process to the defendant at its last known principal place of business and shall keep a record of all process so served upon him. Such service of process is sufficient, if notice of such service and a copy of the process are sent within ten days thereafter by certified mail by plaintiff or plaintiff's attorney to the defendant at its last known principal place of business, and if the defendant's receipt or receipt issued by the post office with which the letter is certified, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear or within such further time as the court may allow. (3) Service of process in any such action, suit, or proceeding shall, in addition to the manner provided in subsection (2) of this section, be valid if served upon any person within this state who, in this state on behalf of such insurer, is soliciting insurance, or making, issuing, or delivering any contract of insurance, or collecting or receiving any premium, membership fee, assessment, or other consideration for insurance, and if a copy of such process is sent within ten days thereafter by registered mail by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant, and if the defendant's receipt or the receipt issued by the postoffice with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear or within such further time as the court may allow. (4) No plaintiff or complainant shall be entitled to a judgment by default under this section until the expiration of thirty days from date of the filing of the affidavit of compliance. (5) Nothing in this section shall limit or abridge the right to serve any process, notice, or demand upon any insurer in any other manner permitted by law. Source: L. 55: p. 476, § 2. CRS 53: § 72-19-2. C.R.S. 1963: § 72-18-2. L. 86: (2) amended, p. 555, § 6, effective July 1. L. 89: (2) amended, p. 437, § 8, effective July 1. Colorado Revised Statutes 2019 Page 270 of 943 Uncertified Printout 10-3-1004. Defense of action by unauthorized insurer. (1) Before any unauthorized foreign or alien insurer files or causes to be filed any pleading in any action, suit, or proceeding instituted against it, the unauthorized insurer shall either deposit cash or securities with the clerk of the court in which such action, suit, or proceeding is pending or file with the clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment that may be rendered in such action, or procure a certificate of authority to transact the business of insurance in this state, unless one or more of the following is applicable: (a) The insurer makes a showing satisfactory to the court and the commissioner that there are, in this state or in another state, cash, securities, bond, or other assets sufficient and available to secure the payment of any final judgment which may be rendered in the action, suit, or proceeding or that the insurance was placed lawfully in the jurisdiction in which the transaction took place and which was not an unlawful placement under the laws of this state; (b) At the time the insurer files any pleading in any action, suit, or proceeding instituted against it, the insurer is listed on the eligible nonadmitted insurers list prepared by the commissioner pursuant to subsection (1) of section 10-5-108; (c) With respect to a contract of reinsurance, the reinsurer has complied with the provisions of this title necessary to permit the ceding insurer to take credit on its financial statement for the reinsurance pursuant to part 7 of this article. (1.5) If an insurer or reinsurer asserts an exemption under paragraph (a), (b), or (c) of subsection (1) of this section, such insurer or reinsurer shall notify the court of the basis on which the exemption is sought and shall file a copy of the assertion with the commissioner of insurance. (2) The court, in any action, suit, or proceeding in which service is made in the manner provided in section 10-3-1003 (2) or (3), may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (1) of this section and to defend such action. (3) Nothing in subsection (1) of this section is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in section 10-3-1003 (2) or (3) on the ground either that such unauthorized insurer has not done any of the acts enumerated in section 10-3-1003 (1) or that the person on whom service was made pursuant to section 10-3-1003 (3) was not doing any of the acts therein enumerated. Source: L. 55: p. 477, § 3. CRS 53: § 72-19-3. C.R.S. 1963: § 72-18-3. L. 97: (1) amended and (1.5) added, p. 531, § 5, effective April 24. L. 2012: (1)(b) amended, (HB 121215), ch. 104, p. 355, § 8, effective August 8. L. 2014: IP(1) and (1)(c) amended, (HB 141315), ch. 295, p. 1217, § 5, effective January 1, 2015. 10-3-1005. Attorney fees. In any action against an unauthorized foreign or alien insurer upon a contract of insurance issued or delivered in this state to a resident thereof or to a corporation authorized to do business therein, if the insurer has failed for thirty days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any Colorado Revised Statutes 2019 Page 271 of 943 Uncertified Printout judgment that may be rendered in such action. Such fee shall not exceed twelve and one-half percent of the amount which the court or jury finds the plaintiff is entitled to recover against the insurer, but in no event shall such fee be less than twenty-five dollars. Failure of an insurer to defend any such action is deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause. Source: L. 55: p. 478, § 4. CRS 53: § 72-19-4. C.R.S. 1963: § 72-18-4. PART 11 UNFAIR COMPETITION - DECEPTIVE PRACTICES Editor's note: This part 11 was numbered as article 14 of chapter 72, C.R.S. 1963. The substantive provisions of this part 11 were repealed and reenacted in 1973, resulting in the addition, relocation, and elimination of sections as well as subject matter. For amendments to this part 11 prior to 1973, consult the Colorado statutory research explanatory note beginning on page vii in the front of this volume. Law reviews: For article, "Insurance Bad Faith in Colorado", see 14 Colo. Law. 1157 (1985); for article, "The Showpiece Homes Decision: From Caveat Emptor to Insurer Beware?", see 31 Colo. Law. 73 (April 2002). 10-3-1101. Legislative declaration. [Editor's note: This version of this section is effective until January 1, 2020.] The purpose of this part 11 is to regulate trade practices in the business of insurance by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices, and by prohibiting the trade practices so defined or determined. No rules or regulations shall be promulgated to adversely affect free and open competition in the sale of insurance. 10-3-1101. Legislative declaration. [Editor's note: This version of this section is effective January 1, 2020.] (1) The purpose of this part 11 is to regulate trade practices in the business of insurance by defining, or providing for the determination of, all such practices in this state that constitute unfair methods of competition or unfair or deceptive acts or practices, and by prohibiting the trade practices so defined or determined. No rules or regulations may be promulgated to adversely affect free and open competition in the sale of insurance. (2) It is in the best interests of the citizens of this state to have transparency in the insurance claims process to further the public policy of encouraging settlement and preventing unnecessary litigation. Claimants and injured parties should fully understand the total amount of insurance coverage available to them. In addition, because payment of uninsured and underinsured motorist benefits covers the difference between the amount of the limits of any legal liability coverage and the amount of the damages sustained, it is important that the citizens of this state have accurate and reliable information about the amount of legal liability coverage available for a claim. Providing information to Colorado residents concerning the amount of liability coverage will: Colorado Revised Statutes 2019 Page 272 of 943 Uncertified Printout (a) Help Colorado residents evaluate whether their uninsured or under-insured motorist coverage will be triggered; and (b) Allow an insurer who provides uninsured or under-insured motorist coverage or policies more time to evaluate and place reserves on claims. Source: L. 73: R&RE, p. 857, § 1. C.R.S. 1963: § 72-14-1. L. 2019: Entire section amended, (HB 19-1283), ch. 250, p. 2426, § 1, effective January 1, 2020. 10-3-1102. Definitions. As used in this part 11, unless the context otherwise requires: (1) "Commissioner" means the commissioner of insurance. (2) "Insurance policy" or "insurance contract" means any contract of insurance, indemnity, medical or hospital service, suretyship, or annuity issued, proposed for issuance, or intended for issuance by any person. (2.5) Repealed. (3) "Person" means any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, nonadmitted insurer, fraternal benefit society, and other legal entities engaged in the insurance business, including agents, limited insurance representatives, agencies, brokers, surplus line brokers, and adjusters. Such term shall also include medical service plans and hospital service plans regulated under parts 1 and 3 of article 16 of this title and health maintenance organizations regulated under parts 1 and 4 of article 16 of this title. Such plans and organizations shall be deemed to be engaged in the business of insurance for purposes of this part 11 only. Source: L. 73: R&RE, p. 857, § 1. C.R.S. 1963: § 72-14-2. L. 78: (2.5) added, p. 293, § 1, effective July 1. L. 81: (2.5) repealed, p. 577, § 5, effective June 4. L. 84: (3) amended, p. 331, § 1, effective July 1. L. 87: (3) amended, p. 425, § 1, effective May 1. L. 92: (3) amended, p. 1723, § 4, effective July 1. L. 95: (3) amended, p. 491, §5, effective May 16. 10-3-1103. Unfair methods of competition - unfair or deceptive acts or practices prohibited. No person shall engage in this state in any trade practice which is defined in this part 11 as, or determined pursuant to section 10-3-1107 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. Source: L. 73: R&RE, p. 858, § 1. C.R.S. 1963: § 72-14-3. 10-3-1104. Unfair methods of competition - unfair or deceptive practices. (1) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: (a) Misrepresentations and false advertising of insurance policies: Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, circular, statement, sales presentation, omission, or comparison which: (I) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy; or (II) Misrepresents the dividends or share of the surplus to be received on any insurance policy; or Colorado Revised Statutes 2019 Page 273 of 943 Uncertified Printout (III) Makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; or (IV) Is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates; or (V) Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; or (VI) Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; or (VII) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or (VIII) Misrepresents any insurance policy as being a security; or (IX) Misrepresentation shall not be construed where a written comparison of policies is made factually disclosing relevant features and benefits for which the policy is issued and by which an informed decision can be made; (b) False information and advertising generally: (I) Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, or with respect to any person in the conduct of his or her insurance business, which is untrue, deceptive, or misleading; (II) Knowingly filing with the commissioner or other public official, or with any employee or agent of the division of insurance in the department of regulatory agencies, a written, false statement of material fact as to the financial condition of an insurer; (III) Knowingly making any false entry of a material fact in any book, report, or other written statement of any insurer; knowingly omitting or failing to make a true entry of a material fact pertaining to the business of the insurer in any book, report, or other written statement of the insurer; or knowingly making any written, false material statement to the commissioner or any employee or agent of the division of insurance in the department of regulatory agencies; (c) Defamation: Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical, or derogatory to the financial condition of any person, and which is calculated to injure such person; (d) Boycott, coercion, and intimidation: Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance; (e) Stock operations and advisory board contracts: Issuing or delivering, or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares, in any corporation, or securities, or any special or advisory board contracts, or other contracts of any kind promising returns and profits as an inducement to insurance; (f) (I) Unfair discrimination: Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of Colorado Revised Statutes 2019 Page 274 of 943 Uncertified Printout life insurance or of life annuity, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract; (II) Making or permitting any unfair discrimination between individuals of the same class or between neighborhoods within a municipality and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of insurance, or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever; (III) Making or permitting to be made any classification solely on the basis of marital status or sex, unless such classification is for the purpose of insuring family units or is justified by actuarial statistics; (IV) Making or permitting to be made any classification solely on the basis of blindness, partial blindness, or a specific physical disability unless such classification is based upon an unequal expectation of life or an expected risk of loss different than that of other individuals; (V) Repealed. (VI) Inquiring about or making an investigation concerning, directly or indirectly, an applicant's, an insured's, or a beneficiary's sexual orientation in: (A) An application for coverage; or (B) Any investigation conducted in connection with an application for coverage; (VII) Using information about gender, marital status, medical history, occupation, residential living arrangements, beneficiaries, zip codes, or other territorial designations to determine sexual orientation; (VIII) Using sexual orientation in the underwriting process or in the determination of insurability; (IX) Making adverse underwriting decisions because an applicant or an insured has demonstrated concerns related to AIDS by seeking counseling from health care professionals; (X) Making adverse underwriting decisions on the basis of the existence of nonspecific blood code information received from the medical information bureau, but this prohibition shall not bar investigation in response to the existence of such nonspecific blood code as long as the investigation is conducted in accordance with the provisions of section 10-3-1104.5; (XI) Reducing benefits under a health insurance policy by the addition of an exclusionary rider, unless such rider only excludes conditions which have been documented in the original underwriting application, original underwriting medical examination, or medical history of the insured, or which can be shown with clear and convincing evidence to have been caused by the medically documented excluded condition; (XII) Denying health care coverage subject to article 16 of this title to any individual based solely on that individual's casual or nonprofessional participation in the following activities: Motorcycling; snowmobiling; off-highway vehicle riding; skiing; or snowboarding; (XIII) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy of sickness and accident insurance, in the benefits payable under such policy, in the terms or conditions of the policy, or in any other manner; (XIV) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazard by refusing to insure, refusing to renew, canceling, or limiting the amount of insurance coverage on a property and casualty risk solely because of the geographic location of the risk, unless the action is the result of the application of Colorado Revised Statutes 2019 Page 275 of 943 Uncertified Printout sound underwriting and actuarial principles related to actual or reasonably anticipated loss experience; (XV) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to insure, refusing to renew, canceling, or limiting the amount of insurance coverage on the residential property risk, or the personal property contained therein, solely because of the age of the residential property; (XVI) Terminating or modifying coverage or refusing to issue or renew any property or casualty policy solely because the applicant or insured or any employee of either is mentally or physically impaired; except that this subparagraph (XVI) does not: (A) Apply to accident and health insurance sold by a casualty insurer; or (B) Modify any other provision of law relating to the termination, modification, issuance, or renewal of any insurance policy or contract; (XVII) Refusing to insure a person solely because another insurer has refused to write a policy, or has cancelled or has refused to renew an existing policy, in which the person was the named insured. Nothing in this subparagraph (XVII) prevents an insurer from terminating an excess insurance policy based on the failure of the insured to maintain any required underlying insurance. (g) Rebates: Except as otherwise expressly provided by law, knowingly permitting, or offering to make, or making any contract of insurance or agreement as to such contract, other than as plainly expressed in the insurance contract issued thereon, or paying, or allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, or selling, or purchasing, or offering to give, sell, or purchase, as inducement to such insurance contract or annuity or in connection therewith any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract; (h) Unfair claim settlement practices: Committing or performing, either in willful violation of this part 11 or with such frequency as to indicate a tendency to engage in a general business practice, any of the following: (I) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; or (II) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies; or (III) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; or (IV) Refusing to pay claims without conducting a reasonable investigation based upon all available information; or (V) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; or (VI) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; or Colorado Revised Statutes 2019 Page 276 of 943 Uncertified Printout (VII) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; or (VIII) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application; or (IX) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured; or (X) Making claims payments to insureds or beneficiaries not accompanied by statement setting forth the coverage under which the payments are being made; or (XI) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; or (XII) Delaying the investigation or payment of claims by requiring an insured or claimant, or the physician of either of them, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; or (XIII) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; or (XIV) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; or (XV) Raising as a defense or partial offset in the adjustment of a third-party claim the defense of comparative negligence as set forth in section 13-21-111, C.R.S., without conducting a reasonable investigation and developing substantial evidence in support thereof. At such time as the issue is raised under this subparagraph (XV), the insurer shall furnish to the commissioner a written statement setting forth reasons as to why a defense under the comparative negligence doctrine is valid. (XVI) Excluding medical benefits under health care coverage subject to article 16 of this title to any covered individual based solely on that individual's casual or nonprofessional participation in the following activities: Motorcycling; snowmobiling; off-highway vehicle riding; skiing; or snowboarding; or (XVII) Failing to adopt and implement reasonable standards for the prompt resolution of medical payment claims; (i) Failure to maintain complaint handling procedures: Failing of any insurer to maintain a complete record of all the complaints which it has received since the date of its last examination. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. For purposes of this paragraph (i), "complaint" shall mean any written communication primarily expressing a grievance. (j) Misrepresentation in insurance applications: Making false or fraudulent statements or representations on or relative to any application for an insurance policy, for the purpose of obtaining a fee, commission, money, or other benefit from any person; Colorado Revised Statutes 2019 Page 277 of 943 Uncertified Printout (k) Requiring, directly or indirectly, any insured or claimant to submit to any polygraph test concerning any application for or any claim under any policy of insurance; (l) Violation of or noncompliance with any insurance law in part 6 of article 4 of this title; (m) Failure to make promptly a full refund or credit of all unearned premiums to the person entitled thereto upon termination of insurance coverage; (n) Requiring or attempting to require or otherwise induce a health care provider, as defined in section 13-64-403 (12)(a), C.R.S., to utilize arbitration agreements with patients as a condition of providing medical malpractice insurance to such health care provider; (o) Failure to comply with all the provisions of section 10-3-1104.5 regarding HIV testing; (p) Violation of or noncompliance with any provision of part 13 of this article; (q) Increasing the premiums unilaterally or decreasing the coverage benefits on renewal of a policy of insurance, increasing the premium on new policies, or failing to issue an insurance policy to barbers, cosmetologists, estheticians, nail technicians, barbershops, or beauty salons, as regulated in article 105 of title 12, regardless of the type of risk insured against, based solely on the decision of the general assembly to stop mandatory inspections of the places of business of such insureds; (r) Repealed. (s) Certifying pursuant to section 10-16-107.2 or issuing, soliciting, or using a policy form, endorsement, or rider that does not comply with statutory mandates. Such solicitation or certification shall be subject to the sanctions described in sections 10-2-704, 10-2-801, 10-2-804, 10-3-1107, 10-3-1108, and 10-3-1109. (t) Certifying pursuant to section 10-4-419 or issuing, soliciting, or using a claims-made policy form, endorsement, or disclosure form that does not comply with statutory mandates. Such solicitation or certification shall be subject to the sanctions described in sections 10-31107, 10-3-1108, and 10-3-1109. (u) Certifying pursuant to section 10-4-633 or issuing, soliciting, or using an automobile policy form, endorsement, or notice form that does not comply with statutory mandates. Such solicitation or certification shall be subject to the sanctions described in sections 10-3-1107, 103-1108, and 10-3-1109. (v) Failure to comply with all provisions of section 10-16-108.5 concerning fair marketing of health benefit plans and section 10-16-105 concerning guaranteed issuance of individual and small employer health benefit plans; (w) Failure to comply with the provisions of section 10-16-105.1 concerning the renewability of health benefit plans; (x) Violation of the provisions of part 8 of article 1 of title 25, C.R.S., concerning patient records; (y) Violating any provision of the "Consumer Protection Standards Act for the Operation of Managed Care Plans", part 7 of article 16 of this title by those subject to said part 7; (z) Willfully violating any provision of section 10-16-113.5; (aa) Certifying pursuant to section 10-10-109 (3) or 10-10-109 (4), issuing, soliciting, or using a credit insurance policy form, certificate of insurance, notice of proposed insurance, application for insurance, endorsement, or rider that does not comply with Colorado law. Such Colorado Revised Statutes 2019 Page 278 of 943 Uncertified Printout certification, issuance, solicitation, or use shall be subject to the sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109. (bb) Certifying pursuant to section 10-15-105 (1), issuing, soliciting, or using a preneed funeral contract form or a form of assignment that does not comply with Colorado law. Such certification, issuance, solicitation, or use shall be subject to the sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109. (cc) Violation of the provisions of section 10-16-122 (4) concerning an unauthorized transfer of a covered person or subscriber's prescription; (dd) Failing to comply with the provisions of section 10-4-628 (2)(a)(V) or 10-16-201 (5); (ee) Willfully or repeatedly violating section 10-11-108 (1)(c) or (1)(d), including a willful or repeated violation through the creation or operation of an improper affiliated business arrangement; (ff) Violation of the "Physician and Dentist Designation Disclosure Act", article 38 of title 25, C.R.S.; (gg) Violation of section 10-16-705 (6.5) or (10.5); (hh) Unfair compensation practices: Basing the compensation of claims employees or contracted claims personnel, including compensation in the form of performance bonuses or incentives, on any of the following: (I) The number of policies canceled; (II) The number of times coverage is denied; (III) The use of a quota limiting or restricting the number or volume of claims; or (IV) The use of an arbitrary quota or cap limiting or restricting the amount of claims payments without due consideration of the merits of the claim; (ii) Violation of section 8-43-401.5, C.R.S.; (jj) Violation of part 6 of article 43 of title 8, C.R.S.; (kk) Violation of section 10-7-703 of the "Insurable Interest Act", part 7 of article 7 of this title; (ll) Engaging in stranger originated life insurance; (mm) Paying a fee or rebate or giving or promising anything of value to a jailer, peace officer, clerk, deputy clerk, an employee of a court, district attorney or district attorney's employees, or a person who has power to arrest or to hold a person in custody as a result of writing a bail bond; (nn) Unless the indemnitor consents in writing otherwise, failure to post a bail bond within twenty-four hours after receipt of full payment or a signed contract for payment, and if the bail bond is not posted within twenty-four hours after receipt of full payment or a signed contract for payment, failure to refund all moneys received, release all liens, and return all collateral within seven days after receipt of good funds; (oo) Failure to report, preserve without use, retain separately, or return after payment in full, collateral taken as security on any bail bond to the principal, indemnitor, or depositor of the collateral; (pp) Soliciting bail bond business in or about any place where prisoners are confined, arraigned, or in custody; (qq) Failure to pay a final, nonappealable judgment award for failure to return or repay collateral received to secure a bond; or Colorado Revised Statutes 2019 Page 279 of 943 Uncertified Printout (rr) Certifying pursuant to section 8-44-102, C.R.S., or issuing, soliciting, or using a workers' compensation form, endorsement, rider, letter, or notice that does not comply with statutory mandates. The solicitation or certification is subject to the sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109. (ss) [Editor's note: This subsection (1)(ss) is effective January 1, 2020.] A violation of section 10-16-704 (3)(d) or (5.5). (2) Nothing in paragraph (f) or (g) of subsection (1) of this section shall be construed as including within the definition of discrimination or rebates any of the following practices: (a) In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, if any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders; (b) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expenses; (c) Readjustment of the rate of premium for a group insurance policy based on the loss or expense thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year; (d) Requests by a person that an applicant or insured take an HIV related test when such request has been prompted by either the health history or current condition of the applicant or insured or by threshold coverage amounts which are applied to all persons within the risk class, as long as such test is conducted in accordance with the provisions of section 10-3-1104.5. (3) Repealed. (4) The following is defined as an unfair practice in the business of insurance: For an insurer to deny, refuse to issue, refuse to renew, refuse to reissue, cancel, or otherwise terminate a motor vehicle insurance policy, to restrict motor vehicle insurance coverage on any person, or to add any surcharge or rating factor to a premium of a motor vehicle insurance policy solely because of: (a) A conviction under section 18-13-122 (3), or section 44-3-901 (1)(c), or any counterpart municipal charter or ordinance offense or because of any driver's license revocation resulting from such conviction. This subsection (4)(a) includes, but is not limited to, a driver's license revocation imposed under section 42-2-125 (1)(m). (b) The licensee's inability to operate a motor vehicle due to physical incompetence if the licensee obtains an affidavit from a rehabilitation provider or licensed physician acceptable to the department of revenue. (5) It shall not be an unfair practice in the business of insurance for an insurer to pay an assignee if the insurer believes in good faith that the claim is subject to a written assignment from the insured. The insurer shall remain responsible to the insured for such amounts pursuant to the applicable policy terms in the event the person paid did not hold a written assignment and did not provide services or goods to the insured at the insured's request. Source: L. 73: R&RE, p. 858, § 1. C.R.S. 1963: § 72-14-4. L. 75: (1)(f)(III) added, p. 341, § 1, effective July 1. L. 78: (1)(f)(IV) added, p. 295, § 1, effective March 21; (3) added, p. 293, § 2, effective March 24. L. 79: IP(1)(h) amended and (1)(l) added, p. 359, § 5, effective Colorado Revised Statutes 2019 Page 280 of 943 Uncertified Printout June 22; (1)(h)(XV) added, p. 383, § 1, effective July 1. L. 80: (1)(f)(V) added, p. 751, § 2, effective April 10. L. 81: (3) repealed, p. 577, § 5, effective June 4. L. 88: (1)(m) and (1)(n) added, pp. 340, 625, §§ 3, 4, effective July 1. L. 89: (1)(f)(VI) to (1)(f)(X), (1)(o), and (2)(d) added, pp. 448, 449, §§ 2-4, effective April 12; (1)(p) added p. 451, § 2, effective July 1. L. 90: (1)(q) added, p. 770, § 29, effective July 1. L. 92: (1)(r) added, p.1503, § 1, effective April 16; (1)(t) and (1)(u) added, p. 1555, § 52, effective May 20; (1)(f)(XI) added, p. 1750, § 3, effective May 29; (1)(s) added, p. 1744, § 3, effective June 2. L. 93: (1)(s) amended, p. 1390, § 6, effective January 1, 1995. L. 94: (1)(v) added, p. 1920, § 13, effective July 1. L. 96: (1)(w) added, p. 459, § 2, effective July 1. L. 97: (1)(x) added, p. 350, § 4, effective April 19; (1)(y) added, p. 1332, § 4, effective July 1; (4) added, p. 1044, § 6, effective August 6; (1)(f)(XII) and (1)(h)(XVI) added, p. 68, §§ 1, 2, effective October 1. L. 98: (4)(a) amended, p. 817, § 8, effective August 5. L. 99: (5) added, p. 312, § 2, effective August 4; (1)(z) added, p. 1056, § 3, effective June 1, 2000. L. 2000: (4)(b) amended, p. 1635, § 7, effective June 1; (1)(aa) and (1)(bb) added, p. 464, § 2, effective August 2. L. 2001: (1)(r) amended, p. 1051, § 36, effective July 1; (1)(cc) added, p. 1231, § 3, effective January 1, 2002. L. 2002: (1)(f)(XII) and (1)(h)(XVI) amended, p. 65, § 1, effective January 1, 2003. L. 2003: (1)(u) amended, p. 1571, § 4, effective July 1. L. 2004: (1)(l) amended, p. 902, § 21, effective May 21; (1)(h)(XVII) added, p. 1102, § 2, effective July 1. L. 2005: (1)(dd) added, p. 221, § 3, effective April 14. L. 2006: (1)(ee) added, p. 269, § 4, effective July 1. L. 2008: (1)(ff) added, p. 2017, § 2, effective September 1. L. 2009: (1)(gg) added, (HB 09-1061), ch. 197, p. 886, § 2, effective August 5. L. 2010:(1)(hh) added, (SB 10-076), ch. 228, p. 987, § 1, effective May 17; (1)(ii) added, (SB 10011), ch. 302, p. 1433, § 5, effective May 27; (1)(b) amended and (1)(f)(XIII), (1)(f)(XIV), (1)(f)(XV), (1)(f)(XVI), and (1)(f)(XVII) added, (HB 10-1220), ch. 197, p. 851, §§ 6, 7, effective July 1; (1)(jj) added, (SB 10-178), ch. 290, p. 1350, § 2, effective July 1. L. 2011: (1)(kk) and (1)(ll) added, (SB 11-182), ch. 227, p. 976, § 2, effective May 27. L. 2012: (1)(mm), (1)(nn), (1)(oo), (1)(pp), and (1)(qq) added, (HB 12-1266), ch. 280, p. 1507, § 37, effective July 1. L. 2013: (1)(v) and (1)(w) amended, (HB 13-1266), ch. 217, p. 986, § 42, effective May 13; (1)(r) amended, (HB 13-1115), ch. 338, p. 1970, § 4, effective May 28. L. 2014: (4)(a) amended, (SB 14-129), ch. 387, p. 1937, § 4, effective June 6; (1)(rr) added, (SB 14-137), ch. 78, p. 317, § 2, effective August 6. L. 2015: (1)(q) amended, (SB 15-106), ch. 122, p. 384, § 20, effective May 1; (1)(ff) amended, (HB 15-1191), ch. 95, p. 274, § 8, effective August 5. L. 2018: (4)(a) amended, (HB 18-1025), ch. 152, p. 1077, § 5, effective October 1. L. 2019: (1)(q) amended, (HB 19-1172), ch. 136, p. 1651, § 33, effective October 1; (1)(ss) added, (HB 19-1174), ch. 171, p. 1982, § 2, effective January 1, 2020. Editor's note: (1) Subsection (1)(f)(V) provided for the repeal of subsection (1)(f)(V), effective July 1, 1987. (See L. 1980, p. 751.) (2) Subsection (1)(r)(II) provided for the repeal of subsection (1)(r), effective March 31, 2015. (See L. 2013, p. 1970.) (3) Section 10 of chapter 171 (HB 19-1174), Session Laws of Colorado 2019, provides that the act changing this section applies to health care services provided on or after January 1, 2020. Cross references: For the legislative declaration contained in the 2000 act enacting subsections (1)(aa) and (1)(bb), see section 1 of chapter 135, Session Laws of Colorado 2000. Colorado Revised Statutes 2019 Page 281 of 943 Uncertified Printout 10-3-1104.5. HIV testing - legislative declaration - definitions - requirements for testing - limitations on disclosure of test results. (1) The general assembly declares that a balance must be maintained between the need for information by those conducting the business of insurance and the public's need for fairness in practices for testing for the human immunodeficiency virus, including the need to minimize intrusion into an individual's privacy and the need to limit disclosure of the results of such testing. (2) As used in this section, unless the context otherwise requires: (a) "AIDS" means acquired immunodeficiency syndrome. (b) "Applicant" means the individual proposed for coverage. (c) "HIV" means human immunodeficiency virus. (d) "HIV infection" means infection with the human immunodeficiency virus or any other related virus identified as a probable causative agent of AIDS. (e) "HIV related test" means any laboratory test or series of tests for any virus, antibody, antigen, or etiologic agent whatsoever thought to cause or to indicate the presence of AIDS. (f) "Person" means any individual, corporation, association, partnership, fraternal benefit society, or any other entity engaged in the insurance business, except insurance agents and brokers. Such term shall also include medical service plans and hospital service plans regulated under parts 1 and 3 of article 16 of this title and health maintenance organizations regulated under parts 1 and 4 of article 16 of this title. Such plans and health maintenance organizations shall be deemed to be engaged in the business of insurance for purposes of this section. (3) No person shall request or require that an applicant submit to an HIV related test unless that person: (a) Obtains the applicant's prior written informed consent; and (b) Reveals, in the written consent form, and explains the use of the HIV related test result to the applicant and entities to whom test results may be disclosed pursuant to paragraphs (a) and (b) of subsection (4) of this section; and (c) Provides the applicant with: (I) Printed material prior to testing which contains factual information describing AIDS; its causes, symptoms, and transmission; and the tests used to detect HIV infection and what a person should do if the result of the HIV related test is positive; or (II) Information on how to obtain relevant counseling from a qualified practitioner having extensive training and experience in addressing the fears, questions, and concerns of persons tested for HIV infection; and (d) Administers the HIV related test based upon the following test protocol, as a minimum: (I) Two positive ELISA tests and a western blot test with bands present at p24, p31, and either gp41 or gp160; or (II) An equally reliable screening or confirmatory test protocol designated by the commissioner, with the approval of the department of public health and environment; and (e) Discloses the results of testing in the manner prescribed by subsection (4) of this section. (4) (a) On the basis of the applicant's written informed consent as specified in subsection (3) of this section, a person may disclose an individual applicant's HIV related test results to its reinsurers or to those contractually retained medical personnel, laboratories, and insurance affiliates, excluding agents and brokers, which are involved in underwriting decisions regarding Colorado Revised Statutes 2019 Page 282 of 943 Uncertified Printout the individual's application if disclosure is necessary to make underwriting decisions regarding such application. (b) Other than the disclosures permitted by paragraph (a) of this subsection (4), no person shall disclose HIV related test results which identify the individual applicant with the test results obtained to anyone without first obtaining separate written informed consent for such disclosure from the applicant; except that, if the result of the HIV related test of an applicant is positive or indeterminate, such person may report the test finding to the medical information bureau but only if a nonspecific blood test result code is used which does not indicate that the applicant was tested for HIV infection. (c) Nothing in this subsection (4) shall be construed to prohibit reporting as required by the provisions of section 25-4-405, C.R.S. (5) A person shall notify the applicant in writing of an adverse underwriting decision based upon the results of such applicant's blood test but shall not disclose the specific results of such blood test to such applicant. The person shall also inform the applicant that the results of the blood test will be sent to the physician designated by the applicant at the time of application and that such physician should be contacted for information regarding the HIV related test. If a physician was not designated at the time of application, the person shall request that the applicant name a physician to whom a copy of the blood test can be sent. (6) Notwithstanding any other provisions to the contrary, any person who fails to comply with all the provisions of this section regarding the disclosure of HIV related test results is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not less than five hundred dollars nor more than five thousand dollars, or by imprisonment in the county jail for not less than six months nor more than twenty-four months, or both such fine and imprisonment. Source: L. 89: Entire section added, p. 446, § 1, effective April 12. L. 92: (2)(f) amended, p. 1724, § 5, effective July 1. L. 94: (3)(d)(II) amended, p. 2723, § 318, effective July 1. L. 2016: (4)(c) amended, (SB 16-146), ch. 230, p. 914, § 4, effective July 1. 10-3-1104.6. Genetic information - limitations on disclosure of information liability - definitions - legislative declaration. (1) The general assembly hereby finds and determines that recent advances in genetic science have led to improvements in the diagnosis, treatment, and understanding of a significant number of human diseases. The general assembly further declares that: (a) Genetic information is the unique property of the individual to whom the information pertains; (b) Any information concerning an individual obtained through the use of genetic services may be subject to abuses if disclosed to unauthorized third parties without the willing consent of the individual to whom the information pertains; (c) To protect individual privacy and to preserve individual autonomy with regard to the individual's genetic information, it is appropriate to limit the use and availability of genetic information; (d) The intent of this section is to prevent genetic information from being used to deny access to health care insurance or medicare supplement insurance coverage. (2) For the purposes of this section: Colorado Revised Statutes 2019 Page 283 of 943 Uncertified Printout (a) "Entity" means any sickness and accident insurance company, health maintenance organization, nonprofit hospital, medical-surgical and health service corporation, or other entity that provides health care insurance or medicare supplement insurance coverage and is subject to the jurisdiction of the commissioner of insurance. (b) "Family member" means an individual who is related to another individual by blood, adoption, or marriage within the first, second, third, or fourth degree. (c) (I) "Genetic information" means information about an individual's genetic test, the genetic tests of family members of the individual, and the manifestation of a disease or disorder in family members of the individual. "Genetic information" includes any request for, or receipt of, genetic services with respect to an individual, or participation by an individual or the family member of an individual in clinical research that includes genetic services. (II) With regard to an individual who is pregnant, "genetic information" includes genetic information of the fetus carried by the pregnant individual. With regard to an individual or family member using reproductive technology, "genetic information" includes genetic information of any embryo legally held by an individual or family member. (III) "Genetic information" does not include information about the sex or age of an individual. (d) "Genetic services" means a genetic test, genetic counseling, which includes obtaining, interpreting, or assessing genetic information, or genetic education. (e) (I) "Genetic test" means any analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations, or chromosomal changes. (II) "Genetic test" does not include: (A) An analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved; or (B) An analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes. (f) "Underwriting purposes" means any of the following: (I) Rules for, or determination of, eligibility for enrollment or continued eligibility in a policy or for benefits under the policy; (II) The computation of premium or contribution amounts under the policy; (III) The application of any preexisting condition exclusion under the policy; and (IV) Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits. (3) (a) Genetic information shall be confidential and privileged. Any release, for purposes other than diagnosis, treatment, or therapy, of genetic information that identifies the person tested with the test results released requires specific written consent by the person about whom the genetic information pertains or the parent or guardian of that person. (b) (I) Any entity that receives genetic information may not seek, use, or keep the information for any nontherapeutic purpose or for any underwriting purpose connected with the provision of health care insurance or medicare supplement insurance coverage. (II) If an entity obtains genetic information incidental to a request or requirement for, or purchase of, other information concerning an individual, the request or requirement for, or purchase of, such information shall not be considered a violation of this paragraph (b) if it is not in violation of paragraph (a) of this subsection (3). Colorado Revised Statutes 2019 Page 284 of 943 Uncertified Printout (c) (I) An entity shall not request or require an individual or family member of the individual to undergo a genetic test unless otherwise authorized by applicable state or federal law. (II) Nothing in this paragraph (c) shall be construed to preclude an entity from obtaining and using the results of a genetic test in making a determination regarding payment, as defined in 45 CFR 164.501, as may be amended, and consistent with paragraphs (a) and (b) of this subsection (3). (4) Notwithstanding the provisions of subsection (3) of this section, in the course of a criminal investigation or a criminal prosecution, and to the extent allowed under the federal or state constitution, any peace officer, district attorney, or assistant attorney general, or a designee thereof, may obtain genetic information regarding the identity of any individual who is the subject of the criminal investigation or prosecution for use exclusively in any criminal investigation or prosecution without the consent of the individual being tested. (5) Notwithstanding the provisions of subsection (3) of this section, any research facility may use genetic information for scientific research purposes if the identity of any individual to whom the information pertains is not disclosed to any third party; except that the individual's identity may be disclosed to the individual's physician if the individual consents to the disclosure in writing. (6) This section does not limit the authority of a court or any party to a parentage proceeding to use genetic information for purposes of determining parentage pursuant to section 13-25-126, C.R.S. (7) This section does not limit the authority of a court or any party to a proceeding that is subject to the limitations of part 5 of article 64 of title 13, C.R.S., to use genetic information for purposes of determining the cause of damage or injury. (8) This section does not limit the authority of the state board of parole to require any offender who is involved in a sexual assault to submit to blood tests and to retain the results of such tests on file as authorized under section 17-2-201 (5)(g), C.R.S. (9) This section does not limit the authority granted the state department of public health and environment, the state board of health, or county, district, or municipal public health agencies pursuant to section 25-1-122, C.R.S. (10) Any violation of this section is an unfair practice as defined in section 10-3-1104 (1), and is subject to the provisions of sections 10-3-1106 to 10-3-1113. (11) Any individual who is injured by an entity's violation of this section may recover in a court of competent jurisdiction the following remedies: (a) Equitable relief, which may include a retroactive order, directing the entity to provide health insurance or medicare supplement insurance coverage, whichever is appropriate, to the injured individual under the same terms and conditions as would have applied had the violation not occurred; and (b) The greater of: (I) An amount equal to any actual damages suffered by the individual as a result of the violation; or (II) Ten thousand dollars per violation. (12) The prevailing party in an action under this section may recover costs and reasonable attorney fees. Colorado Revised Statutes 2019 Page 285 of 943 Uncertified Printout Source: L. 2009: Entire section added, (HB 09-1338), ch. 353, p. 1840, § 2, effective July 1. L. 2010: (9) amended, (HB 10-1422), ch. 419, p. 2066, § 14, effective August 11. 10-3-1104.7. Genetic testing - legislative declaration - definitions - limitations on disclosure of information - liability. (1) The general assembly hereby finds and determines that recent advances in genetic science have led to improvements in the diagnosis, treatment, and understanding of a significant number of human diseases. The general assembly further declares that: (a) Genetic information is the unique property of the individual to whom the information pertains; (b) Any information concerning an individual obtained through the use of genetic techniques may be subject to abuses if disclosed to unauthorized third parties without the willing consent of the individual to whom the information pertains; (c) To protect individual privacy and to preserve individual autonomy with regard to the individual's genetic information, it is appropriate to limit the use and availability of genetic information; (d) The intent of this section is to prevent information derived from genetic testing from being used to deny access to group disability insurance or long-term care insurance coverage. (2) For the purposes of this section: (a) "Entity" means any entity that provides group disability insurance or long-term care insurance coverage and is subject to the jurisdiction of the commissioner of insurance. (b) "Genetic testing" means any laboratory test of human DNA, RNA, or chromosomes that is used to identify the presence or absence of alterations in genetic material which are associated with disease or illness. "Genetic testing" includes only such tests as are direct measures of such alterations rather than indirect manifestations thereof. (3) (a) Information derived from genetic testing shall be confidential and privileged. Any release, for purposes other than diagnosis, treatment, or therapy, of genetic testing information that identifies the person tested with the test results released requires specific written consent by the person tested. (b) Any entity that receives information derived from genetic testing may not seek, use, or keep the information for any nontherapeutic purpose or for any underwriting purpose connected with the provision of group disability insurance or long-term care insurance coverage. (4) Notwithstanding the provisions of subsection (3) of this section, in the course of a criminal investigation or a criminal prosecution, and to the extent allowed under the federal or state constitution, any peace officer, district attorney, or assistant attorney general, or a designee thereof, may obtain information derived from genetic testing regarding the identity of any individual who is the subject of the criminal investigation or prosecution for use exclusively in the criminal investigation or prosecution without the consent of the individual being tested. (5) Notwithstanding the provisions of subsection (3) of this section, any research facility may use the information derived from genetic testing for scientific research purposes so long as the identity of any individual to whom the information pertains is not disclosed to any third party; except that the individual's identity may be disclosed to the individual's physician if the individual consents to such disclosure in writing. Colorado Revised Statutes 2019 Page 286 of 943 Uncertified Printout (6) This section does not limit the authority of a court or any party to a parentage proceeding to use information obtained from genetic testing for purposes of determining parentage pursuant to section 13-25-126, C.R.S. (7) This section does not limit the authority of a court or any party to a proceeding that is subject to the limitations of part 5 of article 64 of title 13, C.R.S., to use information obtained from genetic testing for purposes of determining the cause of damage or injury. (8) This section does not limit the authority of the state board of parole to require any offender who is involved in a sexual assault to submit to blood tests and to retain the results of such tests on file as authorized under section 17-2-201 (5)(g), C.R.S. (9) This section does not limit the authority granted the state department of public health and environment, the state board of health, or local departments of health pursuant to section 251-122, C.R.S. (10) Notwithstanding any provision of this section to the contrary, the only requirements that shall apply to an insurer in connection with life insurance or individual disability insurance are as follows: (a) Except as otherwise specifically authorized or required by another section of state or federal law, an insurer shall not require the performance of or perform a genetic test without first receiving the specific, written, informed consent of the subject of the test who has the capacity to consent or, if the person subject to the test lacks the capacity to consent, of a person authorized by law to consent on behalf of the subject of the test. Written consent shall be in a form prescribed by the commissioner. (b) The results of a genetic test performed pursuant to this subsection (10) are privileged and confidential and shall not be released to any person except as specifically authorized under applicable state or federal law. (11) Any violation of this section is an "unfair practice", as defined in section 10-3-1104 (1), and is subject to the provisions of sections 10-3-1106 to 10-3-1113. (12) Any individual who is injured by an entity's violation of this section may recover in a court of competent jurisdiction the following remedies: (a) Equitable relief, which may include a retroactive order, directing the entity to provide group disability insurance or long-term care insurance coverage, whichever is appropriate, to the injured individual under the same terms and conditions as would have applied had the violation not occurred; and (b) The greater of: (I) An amount equal to any actual damages suffered by the individual as a result of the violation; or (II) Ten thousand dollars per violation. (13) The prevailing party in an action under this section may recover costs and reasonable attorney fees. Source: L. 94: Entire section added, p. 1944, § 1, effective June 2; (9) amended, p. 2614, § 22, effective July 1. L. 2002: (10) and (12) amended, p. 990, § 1, effective June 1. L. 2003: (12)(b)(I) amended, p. 1982, § 7, effective May 22. L. 2009: (1)(d), (2)(a), (3)(b), and (12)(a) amended, (HB 09-1338), ch. 353, p. 1839, § 1, effective July 1. Colorado Revised Statutes 2019 Page 287 of 943 Uncertified Printout 10-3-1104.8. Domestic abuse discrimination - prohibited. (1) As used in this section, unless the context otherwise requires: (a) "Domestic abuse" means the occurrence of one or more of the following acts between family members, current or former household members, or persons who are or have been involved in an intimate relationship: (I) Committing an act of unlawful sexual behavior, as described in part 4 of article 3 of title 18, C.R.S., or otherwise intentionally, knowingly, or recklessly causing or attempting to cause another person, including a minor, bodily injury or physical or psychological harm; or (II) Knowingly engaging in repeated acts under circumstances that place the person toward which such acts are directed in reasonable fear of bodily injury or physical or psychological harm; or (III) Subjecting another person to false imprisonment; or (IV) Intentionally, knowingly, or recklessly causing or attempting to cause damage to property so as to intimidate or attempt to control the behavior of another person. (b) "Domestic abuse related medical condition" means a medical condition sustained by a victim of domestic abuse that arises in whole or in part out of an act or pattern of domestic abuse. (c) "Domestic abuse status" means the fact or perception that a person is or has been a victim of domestic abuse, irrespective of whether the person has sustained a domestic abuse related medical condition. (d) "Victim of domestic abuse" means a person against whom any of the acts specified in paragraph (a) of this subsection (1) has been directed by any of the persons specified in said paragraph (a). (2) The following are unfair methods of competition and unfair or deceptive acts or practices in the business of insurance by insurers licensed in this state, their employees, or their producers: (a) Denying, refusing to issue, refusing to renew, refusing to reissue, canceling, or otherwise terminating an insurance policy or restricting coverage on any person solely because of that person's domestic abuse status; or (b) Adding any surcharge or rating factor to a premium of an insurance policy solely because of an insured's domestic abuse status; or (c) Directly or indirectly asking an insured or an insurance applicant about that person's domestic abuse status unless related to the provision of appropriate medical or mental health services to an insured as provided by the insurance contract or health maintenance organization, but said information shall not be released without specific, separate authorization from the insured; or (d) Disclosing or transferring by insurers licensed in this state, their employees, or their producers any information relating to a person's domestic abuse status or a person's domestic abuse related medical condition as it relates to a person's family, household, social, or employment relationship with a victim of domestic abuse, except: (I) To the extent required in the ordinary course of business and consistent with paragraph (a), (b), or (c) of this subsection (2); (II) To the extent required for compliance with domestic abuse reporting laws or with an order of a court of competent jurisdiction; or Colorado Revised Statutes 2019 Page 288 of 943 Uncertified Printout (III) At the written request of the commissioner for the purpose of determining the insurer's compliance with this section. This paragraph (d) shall not preclude a victim of domestic abuse from obtaining his or her records, including medical records. (3) An insurer that takes an action that adversely affects an insured or an applicant who is a victim of domestic abuse, shall demonstrate to the applicant or the insured, upon the written request of the insured or applicant, that such action is not based solely upon the domestic abuse status of the insured or the applicant but that the action is based on underwriting criteria related to the condition, property, or claim history of the insured or the applicant and that the decision to take such action was based on sound underwriting and actuarial principles related to actual or anticipated loss experience. (4) An insurer that complies with this section and acts in good faith shall not be held civilly liable in any cause of action that may be brought because of compliance with this section. (5) Nothing in this section shall be construed to alter or modify any policy conditions, exclusions, or limitations that are consistent with paragraphs (a), (b), and (c) of subsection (2) of this section and are clearly stated in the contract. (6) Nothing in this section shall be construed to establish a protected class for victims of domestic abuse. Source: L. 97: Entire section added, p. 96, § 1, effective January 1, 1998. 10-3-1105. Favored agent or insurer - coercion of debtors. (1) No person may: (a) Require, as a condition precedent to the lending of money, or extension of credit, or to entering into any lease transaction, or any renewal of any of them, that the person to whom such money or credit is extended, or the lessee, or the person whose obligation the creditor is to acquire or finance negotiate any policy or contract of insurance through a particular insurer or group of insurers or agent or broker or group of agents or brokers; (b) Unreasonably disapprove the insurance policy provided by a borrower or lessee for the protection of the property securing the credit, or lien, or which is the subject of the lease. For the purposes of this paragraph (b), disapproval shall be deemed unreasonable if it is not based solely on reasonable standards uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required; or (c) Require directly or indirectly that any borrower, mortgagor, purchaser, insurer, broker, or agent pay a separate charge in connection with the handling of any insurance policy required as security for a loan on real estate, or pay a separate charge to substitute the insurance policy of one insurer for that of another. The provisions of this paragraph (c) shall not apply to the interest which may be charged on premium loans or premium advancements in accordance with the security instrument. (2) The commissioner may investigate the affairs of any person to whom this section applies to determine whether such person has violated the provisions of this section. If a violation of this section is found, the person in violation shall be subject to the same procedures and penalties as are applicable to other provisions of this part 11. (3) For the purposes of this section, "person" includes any individual, corporation, association, partnership, or other legal entity. Colorado Revised Statutes 2019 Page 289 of 943 Uncertified Printout Source: L. 73: R&RE, p. 861, § 1. C.R.S. 1963: § 72-14-5. L. 85: (1)(a) and (1)(b) amended, p. 302, § 13, effective May 10. 10-3-1106. Power of commissioner. The commissioner shall have power to examine and investigate into the affairs of every person engaged in the business of insurance in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by this part 11. Source: L. 73: R&RE, p. 861, § 1. C.R.S. 1963: § 72-14-6. 10-3-1107. Hearings. Whenever the commissioner has reason to believe that any person has been engaged or is engaging in this state in any unfair method of competition or any unfair or deceptive act or practice, whether defined or reasonably implied in this part 11, or has violated any other provision of this title or any rule or lawful order of the commissioner and that a proceeding by the commissioner in respect thereto would be to the interest of the public, the commissioner shall proceed as provided in article 4 of title 24, C.R.S. Any final action by the commissioner pursuant to this section shall be subject to judicial review by the court of appeals pursuant to section 24-4-106 (11), C.R.S. Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-7. L. 92: Entire section amended, p. 1556, § 53, effective May 20. L. 97: Entire section amended, p. 1077, § 3, effective July 1. 10-3-1108. Orders. (1) If, after a hearing conducted under section 10-3-1107, the commissioner determines that the person charged has engaged in an unfair method of competition or an unfair or deceptive act or practice or has violated any other provision of this title or any rule or lawful order of the commissioner, the commissioner shall reduce the findings to writing and shall issue and cause to be served on such person a copy of such findings and an order requiring such person to cease and desist from engaging in such method of competition, act, practice, or violation, and, except in the case of an act or practice that is not a violation of any specific provision of this title or any specific rule or lawful order of the commissioner, the commissioner may, at his or her discretion, order any one or more of the following: (a) Payment of a monetary penalty of not more than three thousand dollars for each act or violation but not to exceed an aggregate penalty of thirty thousand dollars, unless such person, being an insurer, knew or reasonably should have known he or she was in violation of this part 11, in which case the penalty shall not be more than thirty thousand dollars for each act or violation, but not to exceed an aggregate penalty of seven hundred fifty thousand dollars annually; (b) Suspension or revocation of the person's license if he knew or reasonably should have known he was in violation of the provisions of this part 11; or (c) Payment of a contractual claim to an insured or beneficiary pursuant to an insurance policy if the commissioner finds that the violation of this part 11 caused the failure to pay the claim, which amount shall be determined by the commissioner at the hearing based on the testimony and evidence presented. This paragraph (c) shall not apply during the pendency of any civil action seeking a declaratory judgment concerning such claims. Colorado Revised Statutes 2019 Page 290 of 943 Uncertified Printout (2) Any order issued by the commissioner pursuant to paragraph (c) of subsection (1) of this section may be appealed to the district court, whereupon the matter shall be tried de novo by the district court. Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-8. L. 81: IP(1) amended, p. 577, § 4, effective June 4. L. 90: (1)(c) and (2) added, p. 614, §§ 1, 2, effective April 5. L. 93: (1)(a) amended, p. 393, § 2, effective July 1. L. 94: IP(1) amended, p. 1628, § 23, effective May 31; IP(1) amended, p. 1946, § 2, effective June 2. L. 97: IP(1) amended, p. 1077, § 4, effective July 1; IP(1) amended, p. 98, § 2, effective January 1, 1998. L. 2008: (1)(a) amended, p. 2172, § 3, effective August 5. Editor's note: (1) Amendments to the introductory portion to subsection (1) by Senate Bill 94-058 and Senate Bill 94-206 were harmonized. (2) Senate Bill 97-072 was superseded by and harmonized with Senate Bill 97-108, because the amendment made in Senate Bill 97-108 has the effect of including the referenced section that was added in Senate Bill 97-072. 10-3-1109. Penalty for violation of cease-and-desist orders. (1) Any person who violates a cease-and-desist order of the commissioner issued under section 10-3-1108, and while such order is in effect, may, after notice and hearing and upon order of the commissioner, be subject, at the discretion of the commissioner, to any one or more of the following: (a) A monetary penalty of not more than ten thousand dollars for each and every act or violation of an insurer; or a monetary penalty of not more than five hundred dollars for each and every act or violation of an individual; (b) Suspension or revocation of such person's license. Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-9. 10-3-1110. Rules. (1) The commissioner may, after notice and hearing, as provided in article 4 of title 24, C.R.S., promulgate reasonable rules and regulations as are necessary or proper to identify specific methods of competition or acts or practices which are prohibited by sections 10-3-1104 and 10-3-1105. (2) The commissioner may, after notice and hearing, as provided in article 4 of title 24, C.R.S., promulgate rules with respect to the payment of benefits under group and individual contracts of property or casualty coverage, issued by organizations authorized to do business in this state under the provisions of article 4 of this title; except that, to the extent that a provision of this subsection (2) conflicts with section 10-4-642, as enacted by senate bill 04-125, enacted at the second regular session of the sixty-fourth general assembly, the provisions of said section 10-4-642 shall govern. Such rules may establish a penalty payable to the claimant on benefit payments that are delayed more than sixty days after a valid and complete filing of the claim unless there is a reasonable dispute between the parties concerning such claim. Such penalty shall not exceed twenty dollars on claims of less than one hundred dollars or interest at a rate of eight percent annually on claims above one hundred dollars. In addition to such penalties payable to the claimant, the commissioner, after notice and hearing, may assess a civil penalty against any insurer of one hundred dollars per day for each day benefit payments are delayed Colorado Revised Statutes 2019 Page 291 of 943 Uncertified Printout more than sixty days after a valid and complete filing of the claim unless there is a reasonable dispute between the parties concerning such claim. (3) (Deleted by amendment, L. 99, p. 1142, § 2, effective January 1, 2000.) Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-10. L. 84: Entire section amended, p. 331, § 2, effective July 1. L. 90: (2) amended, p. 614, § 3, effective April 5. L. 91: (2) amended, p. 1909, § 10, effective June 1. L. 92: (2) amended, p. 1556, § 54, effective May 20; (2) amended, p. 1724, § 6, effective July 1. L. 99: (2) and (3) amended, p. 1142, § 2, effective January 1, 2000. L. 2003: (2) amended, p. 1571, § 5, effective July 1. L. 2004: (2) amended, p. 894, § 2, effective May 21; (2) amended, p. 1102, § 3, effective July 1. Editor's note: Amendments to subsection (2) by Senate Bill 92-090 and Senate Bill 92104 were harmonized. 10-3-1111. Provisions of part 11 additional to existing law. The powers vested in the commissioner by this part 11 shall be additional to any other powers to enforce any monetary or other penalties or forfeitures authorized by law with respect to the methods, acts, and practices declared in this part 11 to be unfair or deceptive. Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-11. 10-3-1112. Immunity from prosecution. (1) If any person asks to be excused from attending and testifying or from producing any books, papers, records, correspondence, or other documents at any hearing on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture and, notwithstanding, is directed to give such testimony or produce such evidence, he must comply with such direction; but he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence pursuant thereto; and no testimony so given or evidence so produced shall be received against him upon any criminal action, investigation, or proceeding. No such individual so testifying may be exempt from prosecution or punishment for perjury in the first degree committed by him while so testifying, and the testimony or evidence so given or produced shall be admissible against him upon any criminal action, investigation, or proceeding concerning such perjury; nor may he be exempt from the refusal, revocation, or suspension of any license, permission, or authority conferred, or to be conferred, pursuant to the insurance law of this state. (2) Any such individual may execute, acknowledge, and file in the office of the commissioner a statement expressly waiving such immunity or privilege in respect to any transaction, matter, or thing specified in such statement and thereupon the testimony of such person or such evidence in relation to such transaction, matter, or thing may be received or produced before any judge or justice, court, tribunal, grand jury, or otherwise, and if so received or produced such individual shall not be entitled to any immunity or privilege on account of any testimony he may so give or evidence so produced. Source: L. 73: R&RE, p. 862, § 1. C.R.S. 1963: § 72-14-12. Colorado Revised Statutes 2019 Page 292 of 943 Uncertified Printout 10-3-1113. Information to trier of fact in civil actions. (1) In any civil action for damages founded upon contract, or tort, or both against an insurance company, the trier of fact may be instructed that the insurer owes its insured the duty of good faith and fair dealing, which duty is breached if the insurer delays or denies payment without a reasonable basis for its delay or denial. (2) Under a policy of liability insurance, the determination of whether the insurer's delay or denial was reasonable shall be based on whether the insurer's delay or denial was negligent. (3) Under a policy of first-party insurance, the determination of whether the insurer's delay or denial was reasonable shall be based on whether the insurer knew that its delay or denial was unreasonable or whether the insurer recklessly disregarded the fact that its delay or denial was unreasonable. (4) In determining whether an insurer's delay or denial was reasonable, the jury may be instructed that willful conduct of the kind set forth in section 10-3-1104 (1)(h)(I) to (1)(h)(XIV) is prohibited and may be considered if the delay or denial and the claimed injury, damage, or loss was caused by or contributed to by such prohibited conduct. Source: L. 87: Entire section added, p. 423, § 1, effective July 1. 10-3-1114. Construction of part 11. Except as provided in sections 10-3-1115 and 103-1116, nothing in this part 11 shall be construed to create a private cause of action based on alleged violations of this part 11 or to abrogate any common law contract or tort cause of action. Source: L. 87: Entire section added, p. 424, § 1, effective July 1. L. 2008: Entire section amended, p. 2172, § 4, effective August 5. 10-3-1115. Improper denial of claims - prohibited - definitions - severability. (1) (a) A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant. (b) For the purposes of this section and section 10-3-1116: (I) "First-party claimant" means an individual, corporation, association, partnership, or other legal entity asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy. "First-party claimant" includes a public entity that has paid a claim for benefits due to an insurer's unreasonable delay or denial of the claim. (II) "First-party claimant" does not include: (A) A nonparticipating provider performing services; or (B) A person asserting a claim against an insured under a liability policy. (2) Notwithstanding section 10-3-1113 (3), for the purposes of an action brought pursuant to this section and section 10-3-1116, an insurer's delay or denial was unreasonable if the insurer delayed or denied authorizing payment of a covered benefit without a reasonable basis for that action. (3) If any provision of this section or its application to any person or circumstance is held illegal, invalid, or unenforceable, no other provisions or applications of this section shall be affected that can be given effect without the illegal, invalid, or unenforceable provision or application, and to this end the provisions of this section are severable. (4) The general assembly declares that this section is a law regulating insurance. Colorado Revised Statutes 2019 Page 293 of 943 Uncertified Printout (5) This section and section 10-3-1116 shall not apply to insurance issued in compliance with the "Workers' Compensation Act of Colorado", articles 40 to 47 of title 8, C.R.S. (6) This section and section 10-3-1116 shall not apply to title insurance issued pursuant to article 11 of this title or to life insurance issued pursuant to article 7 of this title. (7) The provisions of this section and section 10-3-1116 do not apply to any claim payment that is delayed or denied because of the insurer's participation in the child support enforcement mechanism established in section 26-13-122.7, C.R.S. Source: L. 2008: Entire section added, p. 2172, § 5, effective August 5. L. 2016: (7) added, (HB 16-1165), ch. 157, p. 490, § 1, effective January 1, 2017. 10-3-1116. Remedies for unreasonable delay or denial of benefits - required contract provision - frivolous actions - severability. (1) A first-party claimant as defined in section 10-3-1115 whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit. (2) An insurance policy, insurance contract, or plan that is issued in this state that offers health or disability benefits shall not contain a provision purporting to reserve discretion to the insurer, plan administrator, or claim administrator to interpret the terms of the policy, contract, or plan or to determine eligibility for benefits. (3) An insurance policy, insurance contract, or plan that is issued in this state shall provide that a person who claims health, life, or disability benefits, whose claim has been denied in whole or in part, and who has exhausted his or her administrative remedies shall be entitled to have his or her claim reviewed de novo in any court with jurisdiction and to a trial by jury. (4) The action authorized in this section is in addition to, and does not limit or affect, other actions available by statute or common law, now or in the future. Damages awarded pursuant to this section shall not be recoverable in any other action or claim. (5) If the court finds that an action brought pursuant to this section was frivolous as provided in article 17 of title 13, C.R.S., the court shall award costs and attorney fees to the defendant in the action. (6) If any provision of this section or its application to any person or circumstance is held illegal, invalid, or unenforceable, no other provisions or applications of this section shall be affected that can be given effect without the illegal, invalid, or unenforceable provision or application, and to this end the provisions of this section are severable. (7) The general assembly declares that this section is a law regulating insurance. Source: L. 2008: Entire section added, p. 2173, § 5, effective August 5. 10-3-1117. Required disclosures - liability - definition. [Editor's note: This section is effective January 1, 2020.] (1) Not more than thirty calendar days after receiving a written request from an insured party, an insurer that issues a commercial automobile or personal automobile policy of insurance for delivery in this state shall provide to the insured party a copy of the complete policy of insurance, including any endorsements. (2) (a) Each insurer that provides or may provide commercial automobile or personal automobile liability insurance coverage to pay all or a portion of a pending or prospective claim Colorado Revised Statutes 2019 Page 294 of 943 Uncertified Printout shall provide to the claimant or the claimant's attorney via mail, facsimile, or electronic delivery, within thirty calendar days after receiving a written request from the claimant or the claimant's attorney, which request is sent to the insurer's registered agent, a statement setting forth the following information with regard to each known policy of insurance of the named insured, including excess or umbrella insurance, that is or may be relevant to the claim: (I) The name of the insurer; (II) The name of each insured party, as the name appears on the declarations page of the policy; (III) The limits of the liability coverage; and (IV) A copy of the policy. (b) An insured party, upon written request of a claimant or a claimant's attorney, shall disclose to the claimant or claimant's attorney the name and coverage of each known insurer of the insured party. (3) An insurer that violates this section is liable to the requesting claimant for damages in an amount of one hundred dollars per day, beginning on and including the thirty-first day following the receipt of the claimant's written request. The penalty accrues until the insurer provides the information required by this section. An insurer that fails to make a disclosure required by this section is also responsible for attorney fees and costs incurred by a claimant in enforcing the penalty. (4) The claimant and any attorney of the claimant shall not disclose to any party the information described in subsection (2)(a) of this section; except that the claimant and an attorney of the claimant may discuss the information with the claimant's insurer. (5) As used in this section, unless the context otherwise requires, "claimant" means a person that has provided notice to an insurer of a potential claim. Source: L. 2019: Entire section added, (HB 19-1283), ch. 250, p. 2427, § 2, effective January 1, 2020. PART 12 SYSTEMS FOR HOLDING AND TRANSFERRING SECURITIES 10-3-1201. Legislative declaration. The purpose of section 10-3-210 (2) and this part 12 is to authorize domestic insurance companies to utilize modern systems for holding and transferring securities without physical delivery of securities certificates, subject to appropriate regulations of the commissioner. Source: L. 83: Entire part added, p. 451, § 2, effective May 3. 10-3-1202. Definitions. As used in this part 12, unless the context otherwise requires: (1) "Clearing corporation" has the meaning ascribed to it in section 4-8-102 (a)(5), C.R.S.; except that, with respect to a security issued by an institution organized or existing under the laws of any foreign country or a security used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "clearing corporation" includes a corporation which is organized or existing under the laws of any foreign country and Colorado Revised Statutes 2019 Page 295 of 943 Uncertified Printout which is legally qualified under such laws to effect transactions in securities by computerized book-entry. (2) "Direct participant" means a bank or trust company or other institution which maintains an account in its name in a clearing corporation and through which an insurance company participates in a clearing corporation. (3) "Federal reserve book-entry system" means the computerized system sponsored by the United States department of the treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and such agencies and instrumentalities, respectively, in federal reserve banks through banks which are members of the federal reserve system or which otherwise have access to such computerized system. (4) "Member bank" means a national bank, state bank, or trust company which is a member of the federal reserve system and through which an insurance company participates in the federal reserve book-entry system. (5) "Security" has any of the meanings specified in section 4-8-102 (a)(15), C.R.S. Source: L. 83: Entire part added, p. 451, § 2, effective May 3. L. 96: (1) and (5) amended, p. 245, § 22, effective July 1. 10-3-1203. Book-entry system. (1) Notwithstanding any provision of law, a domestic insurance company may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation or the federal reserve book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited with such clearing corporation by any person, regardless of the ownership of such securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any member bank through which an insurance company holds securities in the federal reserve book-entry system and the records of any custodian banks through which an insurance company holds securities in a clearing corporation shall, at all times, show that such securities are held for such insurance company and for which accounts thereof. Ownership of, and other interests in, such securities may be transferred by bookkeeping entry on the books of such clearing corporation or in the federal reserve book-entry system without, in either case, physical delivery of certificates representing such securities. (2) The commissioner is authorized to promulgate rules and regulations governing the deposit by insurance companies of securities with clearing corporations and in the federal reserve book-entry system. Source: L. 83: Entire part added, p. 452, § 2, effective May 3. PART 13 MODEL QUALITY REPLACEMENT PARTS ACT Colorado Revised Statutes 2019 Page 296 of 943 Uncertified Printout 10-3-1301. Short title. This part 13 shall be known and may be cited as the "Model Quality Replacement Parts Act". Source: L. 89: Entire part added, p. 450, § 1, effective July 1. 10-3-1302. Legislative declaration. The general assembly declares that the purpose of this article is to recognize the use of replacement automobile crash parts by requiring disclosure when any use is proposed of a nonoriginal equipment replacement crash part, and by requiring that the manufacturer of any such replacement crash part be adequately identified. Source: L. 89: Entire part added, p. 450, § 1, effective July 1. 10-3-1303. Definitions. As used in this part 13, unless the context otherwise requires: (1) "Insurer" means every person engaged as principal, indemnitor, surety, or contractor in the business of making contracts of insurance, and any person authorized to represent an insurer with respect to a claim. (2) "Nonoriginal equipment replacement crash part" means a replacement crash part which is not supplied by the manufacturer of the motor vehicle on which the part is used. (3) "Replacement crash part" means a replacement for any of the nonmechanical sheet metal or plastic parts which generally constitute the exterior of a motor vehicle, including inner and outer panels. Source: L. 89: Entire part added, p. 450, § 1, effective July 1. 10-3-1304. Identification of parts. Any nonoriginal equipment replacement crash part supplied for use in this state shall have the name or trademark of the manufacturer affixed to or inscribed on it. Such name or trademark shall be placed so as to be visible after installation of the part whenever practicable. Source: L. 89: Entire part added, p. 451, § 1, effective July 1. 10-3-1305. Disclosure. No insurer shall specify the use of nonoriginal equipment replacement crash parts in the repair of an insured's motor vehicle without disclosing the intended use of such parts to the insured. In all instances where nonoriginal equipment replacement crash parts are intended for use by an insurer, the written estimate shall clearly identify each such part as being a nonoriginal equipment replacement crash part, and a disclosure document containing the following information in ten-point type or larger type shall appear on or be attached to the insured's copy of the estimate: "This estimate has been prepared based on the use of one or more crash parts supplied by a source other than the manufacturer of your motor vehicle. Warranties, if any, applicable to these replacement crash parts are provided by the parts manufacturer or distributor rather than by the manufacturer of your vehicle." Source: L. 89: Entire part added, p. 451, § 1, effective July 1. Colorado Revised Statutes 2019 Page 297 of 943 Uncertified Printout 10-3-1306. Unfair and deceptive acts. A violation of or noncompliance with any provision of this part 13 shall be an unfair method of competition and unfair or deceptive act or practice in the business of insurance subject to the provisions of part 11 of this article. Source: L. 89: Entire part added, p. 451, § 1, effective July 1. 10-3-1307. Liability. Nothing in this part 13 shall affect either rights, defenses, or liabilities of parties otherwise available at law regarding damages or injuries arising from the use of replacement crash parts. Source: L. 89: Entire part added, p. 451, § 1, effective July 1. PART 14 MODEL RISK RETENTION ACT 10-3-1401. Short title. This part 14 shall be known and may be cited as the "Model Risk Retention Act". Source: L. 91: Entire part added, p. 1248, § 10, effective July 1. 10-3-1402. Purpose. The purpose of this part 14 is to authorize the commissioner to regulate the formation or operation, or both, of risk retention groups and purchasing groups in this state formed pursuant to the provisions of the federal "Liability Risk Retention Act of 1986", to the extent permitted by such federal law. Source: L. 91: Entire part added, p. 1248, § 10, effective July 1. 10-3-1403. Authority of commissioner. The commissioner may establish, and from time to time amend, such regulations as are necessary to enable the commissioner to regulate risk retention groups and purchasing groups in this state to the extent permitted by the federal "Liability Risk Retention Act of 1986" and pursuant to the provisions of the laws of the state of Colorado. Source: L. 91: Entire part added, p. 1248, § 10, effective July 1. Cross references: For the "Liability Risk Retention Act of 1986", see 15 U.S.C. § 3901 et seq. PART 15 OWN RISK AND SOLVENCY ASSESSMENT (ORSA) 10-3-1501. Purpose and scope - applicability - legislative declaration. (1) The purpose of this part 15 is to provide the requirements for maintaining a risk management Colorado Revised Statutes 2019 Page 298 of 943 Uncertified Printout framework and completing an own risk and solvency assessment (ORSA) and provide guidance and instructions for filing an ORSA summary report with the commissioner. (2) The requirements of this part 15 apply to all insurers domiciled in this state unless exempt pursuant to section 10-3-1506. (3) The general assembly finds and declares that the ORSA summary report will contain confidential and sensitive information related to an insurer's or insurance group's identification of risks material and relevant to the insurer or insurance group filing the report. This information will include proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if the information is made public. It is the intent of the general assembly that the ORSA summary report be a confidential document filed with the commissioner, be shared only as stated in this part 15 and to assist the commissioner in the performance of his or her duties, and not be subject to public disclosure. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 73, § 2, effective March 18. 10-3-1502. Definitions. As used in this part 15, unless the context otherwise requires: (1) "Insurance group" means, for the purpose of conducting an ORSA, those insurers and affiliates included within an insurance holding company system as defined in section 10-3-801 (5). (2) "Insurer" has the same meaning as set forth in section 10-3-801 (6) and includes any political subdivision of the state created pursuant to article 45 of title 8, C.R.S. (3) "NAIC" or "national association of insurance commissioners" means the organization of insurance regulators from the fifty states, the District of Columbia, and the four United States territories. (4) "ORSA guidance manual" means the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the NAIC and as amended from time to time. A change in the ORSA guidance manual is effective on the January 1 following the calendar year in which the change is adopted by the NAIC. (5) "ORSA summary report" means a confidential, high-level summary of an insurer's or insurance group's ORSA. (6) "Own risk and solvency assessment" or "ORSA" means a confidential internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer's or insurance group's current business plan and the sufficiency of capital resources to support those risks. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 73, § 2, effective March 18. 10-3-1503. Risk management framework. An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 74, § 2, effective March 18. Colorado Revised Statutes 2019 Page 299 of 943 Uncertified Printout 10-3-1504. ORSA requirement. Subject to section 10-3-1506, an insurer, or the insurance group of which the insurer is a member, shall regularly conduct an ORSA consistent with a process comparable to the ORSA guidance manual. The ORSA must be conducted no less than annually but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 74, § 2, effective March 18. 10-3-1505. ORSA summary report. (1) Upon the commissioner's request, and no more than once each year, an insurer shall submit to the commissioner an ORSA summary report or any combination of reports that together contain the information described in the ORSA guidance manual, applicable to the insurer or the insurance group of which it is a member or to both the insurer and insurance group. Notwithstanding any request from the commissioner, if the insurer is a member of an insurance group, the insurer shall submit the report required by this section if the commissioner is the lead state commissioner of the insurance group as determined by the procedures within the financial analysis handbook adopted by the NAIC. (2) The report shall include a signature of the insurer's or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process, attesting to the best of his or her belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA summary report and that a copy of the report has been provided to the insurer's board of directors or the appropriate committee of the board of directors. (3) An insurer may comply with subsection (1) of this section by providing the most recent and substantially similar report provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the ORSA guidance manual. Any report in a language other than English must be accompanied by a translation of that report into the English language. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 74, § 2, effective March 18. 10-3-1506. Exemption. (1) An insurer is exempt from the requirements of this part 15 if: (a) The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, less than five hundred million dollars; and (b) The insurance group of which the insurer is a member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, less than one billion dollars. (2) If an insurer qualifies for exemption under paragraph (a) of subsection (1) of this section, but the insurance group of which the insurer is a member does not qualify for exemption under paragraph (b) of subsection (1) of this section, then the ORSA summary report required under section 10-3-1505 must include every insurer within the insurance group. This Colorado Revised Statutes 2019 Page 300 of 943 Uncertified Printout requirement may be satisfied by the submission of more than one ORSA summary report for any combination of insurers if any combination of reports includes every insurer within the insurance group. (3) If an insurer does not qualify for exemption under paragraph (a) of subsection (1) of this section, but the insurance group of which it is a member qualifies for exemption under paragraph (b) of subsection (1) of this section, then the only ORSA summary report required under section 10-3-1505 is the report applicable to that insurer. (4) An insurer that does not qualify for exemption under subsection (1) of this section may apply to the commissioner for a waiver from the requirements of this part 15 based upon unique circumstances. In deciding whether to grant the insurer's request for waiver, the commissioner may consider the type and volume of business written, ownership and organizational structure, and any other factor the commissioner considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the commissioner shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver. (5) Notwithstanding the exemptions provided in this section: (a) The commissioner may require that an insurer maintain a risk management framework, conduct an ORSA, and file an ORSA summary report based on unique circumstances including the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests; (b) The commissioner may require that an insurer maintain a risk management framework, conduct an ORSA, and file an ORSA summary report if the insurer has risk-based capital for a company action level event as set forth in the applicable rules promulgated by the commissioner relating to insurers' risk-based capital, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in the applicable rules promulgated by the commissioner to define standards and the commissioner's authority for companies deemed to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer as determined by the commissioner. (6) If an insurer that qualifies for an exemption under subsection (1) of this section subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer has one year after the year the threshold is exceeded to comply with the requirements of this part 15. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 75, § 2, effective March 18. 10-3-1507. Contents of ORSA summary report. (1) The ORSA summary report must be prepared to be consistent with the ORSA guidance manual, subject to the requirements of subsection (2) of this section. Documentation and supporting information must be maintained and made available upon examination or upon request of the commissioner. (2) The review of the ORSA summary report and any additional requests for information must be made using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups. Colorado Revised Statutes 2019 Page 301 of 943 Uncertified Printout Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 76, § 2, effective March 18. 10-3-1508. Confidentiality. (1) Documents, materials, or other information, including the ORSA summary report, in the possession or control of the division of insurance that are obtained by, created by, or disclosed to the commissioner or any other person under this part 15, are recognized by this state as being proprietary and containing trade secrets. All documents, materials, or other information, including the ORSA summary report, are confidential by law and privileged; are not subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., or other open records, freedom of information, sunshine, or other similar law of this state; are not subject to subpoena; and are not subject to discovery or admissible in evidence in any private civil action. However, the commissioner may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. (2) Neither the commissioner nor any person who received documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the commissioner or with whom such documents, materials, or other information are shared pursuant to this part 15 is permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (1) of this section. (3) In order to assist in the performance of the commissioner's regulatory duties, the commissioner: (a) May, upon request, share documents, materials, or other ORSA-related information, including the confidential and privileged documents, materials, or information subject to subsection (1) of this section, including proprietary and trade-secret documents and materials, with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in section 10-3-807, with the NAIC and with any third-party consultants designated by the commissioner, if the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; and (b) May receive documents, materials, or other ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade-secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of any supervisory college as defined in section 10-3-807, and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; (c) Shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this part 15, consistent with this subsection (3), which agreement must: (I) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this part 15, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers. The agreement must provide that the recipient Colorado Revised Statutes 2019 Page 302 of 943 Uncertified Printout agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality. (II) Specify that ownership of information shared with the NAIC or a third-party consultant pursuant to this part 15 remains with the commissioner and that the NAIC's or thirdparty consultant's use of the information is subject to the direction of the commissioner; (III) Prohibit the NAIC or third-party consultant from storing the information shared pursuant to this part 15 in a permanent database after the underlying analysis is completed; (IV) Require prompt notice be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant pursuant to this part 15 is subject to a request or subpoena to the NAIC or third-party consultant for disclosure or production; (V) Require the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or thirdparty consultant pursuant to this part 15; and (VI) In the case of an agreement involving a third-party consultant, provide for the insurer's written consent. (4) The sharing of information and documents by the commissioner under this part 15 does not constitute a delegation of regulatory authority or rule-making, and the commissioner is solely responsible for the administration, execution, and enforcement of this part 15. (5) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other ORSA-related information may occur as a result of disclosure of such ORSA-related information or documents to the commissioner under this section or as a result of sharing as authorized in this part 15. (6) Documents, materials, or other information in the possession or control of the NAIC or a third-party consultant under this part 15 is confidential by law and privileged; is not subject to the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., or other open records, freedom of information, sunshine, or other similar law of this state; is not subject to subpoena; and is not subject to discovery or admissible in evidence in any private civil action. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 76, § 2, effective March 18. 10-3-1509. Sanctions. Any insurer failing, without just cause, to timely file the ORSA summary report as required in this part 15 shall, after notice and hearing, pay a penalty of two hundred dollars for each day's delay. The maximum penalty under this section is twenty-five thousand dollars. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 78, § 2, effective March 18. 10-3-1510. Rules. The commissioner may, upon notice and opportunity for all interested persons to be heard, issue rules and orders as are necessary to carry out this part 15. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 78, § 2, effective March 18. Colorado Revised Statutes 2019 Page 303 of 943 Uncertified Printout 10-3-1511. Effective date. The requirements of this part 15 are effective beginning with calendar year 2017. The first required filing of the ORSA summary report is in 2017 as specified in section 10-3-1505. An insurer that has maintained a risk management framework consistent with the requirements of this part 15 in calendar year 2016 may, but is not required to, file its ORSA summary report in 2016, and such report will be confidential as specified in section 10-31508. Source: L. 2016: Entire part added, (SB 16-029), ch. 32, p. 78, § 2, effective March 18. PART 16 CORPORATE GOVERNANCE ANNUAL DISCLOSURES 10-3-1601. Purpose and scope - applicability - legislative declaration. (1) The purpose of this part 16 is to: (a) Provide the commissioner a summary of each insurer's and insurance group's corporate governance structure, policies, and practices to permit the commissioner to gain and maintain an understanding of each insurer's and insurance group's corporate governance framework; (b) Outline the requirements for submitting a corporate governance annual disclosure to the commissioner; and (c) Provide for the confidential treatment of each insurer's and insurance group's corporate governance annual disclosure and related information, which may contain confidential and sensitive information related to the insurer's or insurance group's internal operations, including proprietary and trade secret information the public disclosure of which could potentially cause competitive harm or disadvantage to the insurer or insurance group. (2) (a) Nothing in this part 16 may be construed to prescribe or impose corporate governance standards or internal procedures beyond those standards and procedures that are required under applicable Colorado corporate law. (b) Notwithstanding subsection (2)(a) of this section, nothing in this part 16 may be construed to limit the commissioner's authority or the rights or obligations of third parties under part 2 of article 1 of this title 10. (3) The requirements of this part 16 apply to all insurers domiciled in this state. Source: L. 2019: Entire part added, (HB 19-1291), ch. 188, p. 2084, § 1, effective August 2. 10-3-1602. Definitions. As used in this part 16, unless the context otherwise requires: (1) "Corporate governance annual disclosure" or "CGAD" means a confidential report filed by an insurer or an insurance group in accordance with the requirements of this part 16. (2) "Insurance group" means those insurers and affiliates that are included within an insurance holding company system, as defined in section 10-3-801 (5). (3) "Insurer" has the meaning set forth in section 10-3-801 (6); except that "insurer" does not include an agency, authority, or instrumentality of the United States or its possessions and Colorado Revised Statutes 2019 Page 304 of 943 Uncertified Printout territories, the commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. (4) "NAIC" means the National Association of Insurance Commissioners. (5) "ORSA summary report" has the meaning set forth in section 10-3-1502 (5). Source: L. 2019: Entire part added, (HB 19-1291), ch. 188, p. 2085, § 1, effective August 2. 10-3-1603. Disclosure requirement. (1) On June 1, 2020, and on June 1 of each year thereafter, an insurer, or the insurance group of which the insurer is a member, shall submit to the commissioner a CGAD that contains the information described in section 10-3-1604 and in subsection (2) of this section. Notwithstanding any request from the commissioner made pursuant to subsection (3) of this section, if an insurer is a member of an insurance group, the insurer shall submit the report required by this section to the commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent financial analysis handbook adopted by the NAIC. (2) The CGAD must include the signature of the insurer or insurance group's chief executive officer or corporate secretary attesting tha