Indiana State Life and Health Insurance Practice Exam

What would be an accurate definition of "controlled business"?

1. Insurance business that is written on the producer's own life, property, or interests

2. Insurance business obtained by an agent through coercion, intimidation, or boycotting

3. Insurance business that is obtained through false advertising

4. Insurance business that is obtained by replacing an existing policy through misrepresentation

The correct answer is: Insurance business that is written on the producer's own life, property, or interests

The definition of "controlled business" refers to the insurance policies that a producer, such as an insurance agent, writes on their own life, property, or interests. This is relevant in the insurance industry because it addresses the potential conflict of interest when agents may prioritize their own policies over those of their clients. Controlled business can impact the agent's earnings and the overall ethical standards of insurance practice, as it emphasizes that agents should not solely focus on personal gain but also consider the needs of their clients. The other options do not accurately define controlled business. Obtaining insurance through coercion, intimidation, or false advertising involves unethical practices that are not representative of the concept of controlled business. Similarly, replacing an existing policy through misrepresentation is a form of misconduct and does not align with the definition of controlled business, which specifically pertains to coverage that involves the producer's personal interests. Understanding controlled business helps ensure that agents operate within ethical guidelines while serving their clients effectively.