The practice of selling most policies to family members is called?

• A. Family sales
• B. Churning
• C. Related-party marketing
• D. Controlled business

Answer: (D)

Selling most policies to family members is called controlled business. This term describes the situation where a producer concentrates a large portion of their insurance placements with relatives or with entities they control. Regulators and insurers monitor controlled business because it can create conflicts of interest, lead to unsuitable coverage, or artificially boost commissions. To guard against abuse, there are often limits on how much controlled business a producer can write and requirements for disclosure and scrutiny. Other terms like churning refer to replacing policies for commissions, while family sales or related-party marketing aren’t the standard regulatory labels for this practice; the established term is controlled business.