West Virginia Property and Casualty Licensing Practice Exam

What is the term for the amount of insurance an agent can write for their family or employer within a specific timeframe?

1. Controlled business

2. Limited risk business

3. Independent business

4. Commercial business

The correct answer is: Controlled business

The term "Controlled business" refers to the insurance policies that an agent writes for themselves, their family members, or their employer within a specific timeframe. This concept is important in the insurance industry to ensure that agents are not primarily writing business for personal gain or profit through closely-held relationships, which can create conflicts of interest. Controlled business policies must adhere to regulatory scrutiny to maintain ethical standards and ensure that the insurance market remains fair and competitive. By regulating this practice, states like West Virginia aim to prevent agents from exploiting their positions to gain undue financial benefits at the expense of other clients or the integrity of the insurance marketplace. The other terms provided, such as limited risk business, independent business, and commercial business, do not specifically refer to the relationship between agents and the individuals they are closely connected with. Therefore, they do not accurately capture the essence of what controlled business signifies in the context of insurance practice.