Section 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(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 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;(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 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 canceled 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(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;(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;(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 10-3-1107, 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, 10-3-1108, 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 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;(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) A violation of section 10-16-704 (3)(d) or (5.5);(tt) A violation of part 15 of article 16 of this title 10.(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.(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) prior to its repeal in 2021.(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.Amended by 2022 Ch. 312, § 2, eff. 8/10/2022.Amended by 2021 Ch. 460, § 8, eff. 1/1/2022.Amended by 2019 Ch. 171, § 2, eff. 1/1/2020.Amended by 2019 Ch. 136, § 33, eff. 10/1/2019.Amended by 2018 Ch. 152, § 5, eff. 10/1/2018.Amended by 2015 Ch. 95, § 8, eff. 8/5/2015.Amended by 2015 Ch. 122, § 20, eff. 5/1/2015.Amended by 2014 Ch. 78, § 2, eff. 8/6/2014.Amended by 2014 Ch. 387, § 4, eff. 6/6/2014 and applicable to offenses committed on or after 7/1/2014.Amended by 2013 Ch. 338, § 4, eff. 5/28/2013.Amended by 2013 Ch. 217, § 42, eff. 5/13/2013.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 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 1/1/1995. 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 6/1/2000. 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 1/1/2002. L. 2002: (1)(f)(XII) and (1)(h)(XVI) amended, p. 65, § 1, effective 1/1/2003. 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. 886, p. 886, § 2, effective August 5. L. 2010:(1)(hh) added, (SB 10-076), ch. 987, p. 987, § 1, effective May 17; (1)(ii) added, (SB 10-011), ch. 1433, 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. 851, p. 851, §§ 6, 7, effective July 1; (1)(jj) added, (SB 10-178), ch. 1350, p. 1350, § 2, effective July 1. L. 2011: (1)(kk) and (1)(ll) added, (SB 11-182), ch. 976, p. 976, § 2, effective May 27. L. 2012: (1)(mm), (1)(nn), (1)(oo), (1)(pp), and (1)(qq) added, (HB 12-1266), ch. 1507, 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. 1970, 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. 317, 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. 274, p. 274, § 8, effective August 5. L. 2018: (4)(a) amended, (HB 18-1025), ch. 1077, p. 1077, § 5, effective October 1. L. 2019: (1)(q) amended, (HB 19-1172), ch. 1651, p. 1651, § 33, effective October 1; (1)(ss) added, (HB 19-1174), ch. 1982, p. 1982, § 2, effective 1/1/2020. (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.)
2022 Ch. 312, was passed without a safety clause. See Colo. Const. art. V, § 1(3). 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.