Question

When does controlled business occur in insurance transactions?

A) When the commissions exceed set limits
B) When the commissions are lower than expected
C) When the commissions on controlled business surpass those on other business
D) When the commissions are equally distributed among different types of business

Answer 1

Controlled business in insurance happens when the commissions from sales to personal connections, like family or one's own businesses, exceed those from the general public, leading to regulatory concerns and potential limits.

Step-by-step explanation:

Controlled business in insurance transactions occurs when the commissions on controlled business surpass those on other business. This scenario is often seen when an insurance agent sells insurance to themselves, their family, or their business entities, leading to a situation where the volume of controlled business has the potential to significantly outpace that of business sourced from the general public. Regulations often limit the amount of controlled business an agent can generate to ensure that their financial practices remain centered on serving the broader market rather than primarily serving their interests.