A producer who sells most of his policies to family members is engaging in what type of business?

• A. Controlled business
• B. Nonstandard business
• C. Fraudulent business
• D. Public business

Answer: (A)

Controlled business occurs when an agent mainly writes policies for people who are under the agent’s influence or control, such as family members. When a producer sells most of his policies to relatives, the business is driven by personal relationships rather than broad market demand, which is exactly what “controlled” describes. The idea behind monitoring controlled business is to prevent agents from using family ties to win commissions or bypass fair underwriting. The other terms don’t fit this scenario: nonstandard business involves higher-risk applicants, fraudulent business implies deception, and public business means selling to the general, unrelated public.