Illinois Casualty Insurance State Practice Exam

What is the maximum percentage of controlled business premiums that can be sold by an insurance agent to meet licensing requirements?

1. 10%

2. 25%

3. 50%

4. 75%

The correct answer is: 50%

In Illinois, to maintain a valid insurance agent's license, there is a specific regulation regarding the distribution of controlled business premiums. Controlled business refers to premiums that an agent earns from insuring themselves, their family, or their business interests. The regulation is designed to ensure that agents actively seek out new clients and do not rely solely on their own circle of influence for their business. The correct answer indicates that an insurance agent may sell up to 50% of their total premiums from controlled business sources to meet licensing requirements. This establishes a balance between allowing agents to serve their own business needs and ensuring that they are also engaging with the broader market for insurance products. Agents must therefore work to generate new business beyond just the controlled sources to comply with licensing standards and promote fair competition in the insurance market. Understanding this limit is crucial for agents as it directly affects their operations and compliance with state regulations. It encourages diversification in client portfolios and emphasizes the importance of expanding their reach within the community and market.