What does controlled business refer to in insurance?

Controlled business in insurance is defined as insurance policies that an agent writes for themselves or for close relatives, such as family members. This concept is crucial in the insurance industry because it helps regulate and limit potential abuses of the system, where agents might prioritize writing policies for themselves or their family over providing coverage for the general public.

The regulatory concern is that an agent may have too much influence over their own financial interests if they focus primarily on insuring themselves or those financially close to them. This can create a conflict of interest and may limit the diversity of clients that the agent would serve. Therefore, many jurisdictions have rules to ensure that a reasonable proportion of an agent's business comes from unrelated third parties to promote fairness in the industry.

In the context of the other options, the notion of policies being controlled by the insurer does not capture the essence of controlled business, which is focused on the personal interests of the agent. Similarly, while policies vested with the writing agent may refer to ownership aspects of insurance, it does not align specifically with the term “controlled business.” Lastly, while insurance business generating commissions and renewals is relevant to an agent’s financial interests, it does not reflect the specific nature of controlled business as it pertains directly to policies written for the