When is controlled business legal?

• A. When the commissions from controlled business do not exceed the aggregate commissions on all the other business.
• B. When it represents more than half of total business.
• C. Only allowed for life insurance.
• D. Never allowed.

Answer: (A)

Controlled business is insurance written for the licensee themselves, their family, or their business associates. It’s allowed only if the commissions from that controlled business do not exceed the commissions from all other, unrelated business. This keeps the agent’s focus on a broad market and reduces conflicts of interest by preventing overreliance on related-party policies.

So the best answer is that controlled commissions must not be greater than the commissions from the rest of the business. This limit applies across lines, not just a single type, and it means controlled business isn’t automatically disallowed; it’s allowed up to that balance.

The other options don’t fit because: the rule isn’t that controlled business is allowed only if it exceeds half of total business, but rather that it does not exceed the non-controlled portion; controlled business isn’t restricted to life insurance; and controlled business isn’t never allowed.