House Committees Senate Committees

Business Affairs and Labor

A BILL FOR AN ACT

101 CONCERNING FINANCIAL RESPONSIBILITY FOR UNFAIR BUSINESS

102 PRACTICES IN THE SALE OF INSURANCE.

Bill Summary

(Note: This summary applies to this bill as introduced and does

not necessarily reflect any amendments that may be subsequently

adopted.)

Authorizes the commissioner of insurance to collect restitution

from insurance producers and insurance companies for wrongful acts.

Requires an insurer to be financially responsible for the unfair business

practices of an insurance producer authorized to sell a product or plan of the insurer, if the insurer knew or should have known about the unfair business practices.

1 Be it enacted by the General Assembly of the State of Colorado:

2 SECTION 1. The introductory portion to 10-2-801 (1), Colorado

3 Revised Statutes, is amended to read:

4 10-2-801. Licenses - denial, suspension, revocation,

5 termination - reporting of actions. (1) The commissioner may place

6 AN INSURANCE PRODUCER on probation; suspend, revoke, OR refuse to

7 ISSUE, continue, or renew refuse to issue an insurance producer license;

8 COLLECT RESTITUTION FROM AN INSURANCE PRODUCER; or assess a civil

9 penalty pursuant to section 10-2-804 or 10-3-1108, if, after notice to the

10 insurance producer licensee and after A hearing HELD in accordance with

11 sections 24-4-104 and 24-4-105, C.R.S., the commissioner finds that as

12 to the licensee or applicant any one or more of the following conditions

13 exist:

14 SECTION 2. 10-3-105, Colorado Revised Statutes, is amended

15 BY THE ADDITION OF A NEW SUBSECTION to read:

16 10-3-105. Certificate of authority to do business - companies

17 prohibited - definitions. (4) (a) THE COMMISSIONER MAY COLLECT

18 RESTITUTION FROM AN INSURER TO BE PAID TO A PERSON, IF, AFTER NOTICE

19 TO THE INSURER AND AFTER A HEARING HELD IN ACCORDANCE WITH

20 SECTIONS 24-4-104 AND 24-4-105, C.R.S., THE COMMISSIONER FINDS THAT

21 THE INSURER HAS VIOLATED THE PROVISIONS OF THIS ARTICLE OR THAT

22 THE INSURER IS FINANCIALLY RESPONSIBLE FOR THE UNFAIR BUSINESS

23 PRACTICES OF AN INSURANCE PRODUCER PURSUANT TO SECTION 10-3-131.

24 (b) AS USED IN THIS SUBSECTION (4), "INSURANCE PRODUCER"

25 SHALL HAVE THE SAME MEANING AS SET FORTH IN SECTION 10-2-103 (6).

26 SECTION 3. Part 1 of article 3 of title 10, Colorado Revised

1 Statutes, is amended BY THE ADDITION OF A NEW SECTION to

2 read:

3 10-3-131. Acts of producers - responsibility of the insurer -

4 definitions. (1) AN INSURER AUTHORIZED TO CONDUCT BUSINESS IN THIS

5 STATE SHALL BE FINANCIALLY RESPONSIBLE FOR THE UNFAIR BUSINESS

6 PRACTICES OF THE INSURANCE PRODUCER AUTHORIZED TO SELL A

7 PRODUCT OR PLAN OF THE INSURER TO ANY PERSON IN THIS STATE, IF THE

8 INSURER KNEW OR SHOULD HAVE KNOWN ABOUT THE UNFAIR BUSINESS

9 PRACTICES.

10 (2) AS USED IN THIS SECTION, "INSURANCE PRODUCER" SHALL

11 HAVE THE MEANING SET FORTH IN SECTION 10-2-103.

12 SECTION 4. Effective date - applicability. (1) This act shall

13 take effect at 12:01 a.m. on the day following the expiration of the

14 ninety-day period after final adjournment of the general assembly that is

15 allowed for submitting a referendum petition pursuant to article V,

16 section 1 (3) of the state constitution, (August 6, 2008, if adjournment

17 sine die is on May 7, 2008); except that, if a referendum petition is filed

18 against this act or an item, section, or part of this act within such period,

19 then the act, item, section, or part, if approved by the people, shall take

20 effect on the date of the official declaration of the vote thereon by

21 proclamation of the governor.

22 (2) The provisions of this act shall apply to acts or occurrences on

23 or after the applicable effective date of this act.