West Virginia Property and Casualty Licensing Practice Exam

Who primarily benefits from controlled business insurance?"

1. Individuals outside the agent's immediate family

2. Direct clients outside of the agent's employer

3. The agent's immediate family and their employer

4. General public

The correct answer is: The agent's immediate family and their employer

Controlled business insurance refers to a situation where an insurance agent or producer writes a significant portion of their business for clients who are closely related to them, such as family members or people in their social circle. This practice can lead to potential conflicts of interest, as the agent may prioritize the needs of these clients over others. The primary benefit of controlled business insurance goes to the agent's immediate family, as they are typically the individuals directly receiving insurance coverage from the agent. Additionally, the agent's employer can benefit by having a guaranteed stream of business since the agent is likely to sell policies to those close to them. In this context, the other options are less applicable to the concept. Direct clients outside of the agent's employer may not receive the same level of benefit, as they are not the focus of controlled business insurance. Similarly, individuals outside the agent's immediate family might not have the same level of access or preferential treatment. The general public, while still served by agents, is typically not the primary beneficiary in this controlled business environment. Thus, option C accurately captures the main beneficiaries of controlled business insurance.