A producer who sells most of his/her insurance policies to family members is said to be engaging in

• A. Churning
• B. Fronting
• C. Controlled business
• D. Rebating

Answer: (C)

Controlled business is when a producer’s own close relationships, like with family members, drive most of their life insurance sales. When an agent sells a large share of policies to relatives, regulators view it as the producer exercising undue influence over the business and potentially creating conflicts of interest or unethical practices. This scenario fits the label because the policyowners are people the agent can control or influence directly through the relationship, rather than independent, marketplace customers.

Churning refers to repeatedly replacing policies to generate additional commissions, fronting involves a policy issued with the intent that someone other than the actual owner benefits, and rebating means giving back part of the premium or other inducements. Those situations describe different improper practices and don’t capture the essence of selling mainly to family members.