Illinois Casualty Insurance State Practice Exam

What does 'Controlled Business' refer to in insurance terms?

1. Selling insurance to anyone in the community

2. Selling insurance only to oneself and immediate family

3. Brokerage agreements with multiple insurers

4. Insurance sales for large corporations

The correct answer is: Selling insurance only to oneself and immediate family

'Controlled Business' in the context of insurance specifically refers to situations where an agent primarily sells insurance policies to themselves or to their immediate family members. This concept is significant because it can raise ethical concerns and may lead to regulatory scrutiny, as it often indicates that the agent is focusing on personal or close family gains rather than working to provide coverage to a broader clientele. In many jurisdictions, including Illinois, regulations may limit the amount of controlled business an agent can write to ensure that insurance practices remain fair and competitive. Other options do not capture the essence of 'Controlled Business.' Selling insurance to the wider community represents a more traditional and ethical practice in insurance sales. Brokerage agreements with multiple insurers pertain to the contractual relationships that agents maintain with insurers, allowing them to sell policies from various providers, which is distinct from the concept of controlled business. Lastly, insurance sales for large corporations usually involve commercial insurance practices that are unrelated to the personal scope encompassed by controlled business.