Colorado issued a cease-and-desist order against the now-defunct Prime Travel Protection and its principals, Jerry and Christine Watson, demanding that they stop selling their unlicensed travel insurance in the state.
Cameron Lewis, director of consumer education at the Colorado Division of Insurance, said issuing a cease-and-desist order after the fact serves a couple of purposes.
It puts the named individuals on notice that they are not to sell unlicensed insurance in the state under any business name and, she said, it raises awareness among consumers and regulators in other states.
Also, if Prime or its principals violate the Colorado order, they face fines of up to $25,000 for each violation or a requirement to make restitution.
The cease-and-desist order addresses Prime's ongoing liquidation, stating that Prime, which operated in Arvada, Colo., and its principals are forbidden to resolve pending or future customer claims "with a fraudulent or unauthorized travel voucher or any other method that is illegal, unlawful or requires insurance licensure."
That language was triggered in part by a complaint from CruCon Cruise Outlet Plus in Moultonborough, N.H., alleging that Prime settled a claim with a consumer by issuing a $1,405 voucher for the purchase of travel from the New Hampshire agency. CruCon said Prime was not authorized to issue such vouchers for the agency.
The Colorado Division of Insurance said it was unclear how traveler claims would be handled going forward or how much money was available. The state said about 200 Colorado residents bought the coverage, and 32 of those customers were scheduled to travel in February or later.
Besides failing to obtain proper authority to sell its travel insurance, the state said, Prime, for much of its existence, obtained underwriting services from an unlicensed firm based in Vanuatu in the South Pacific.
Prime operated from February 2007 until late January 2009, when it announced it would liquidate.
According to the state, Jerry Watson, Prime's co-owner and president, had a history of association with unlicensed sellers of travel insurance.
In March, Florida issued preliminary cease-and-desist orders against three agents ordering them to stop selling the unlicensed Prime products and/or products of other unlicensed companies with which Watson has been associated.