What is regulated under the concept of controlled business in insurance?

The concept of controlled business in insurance refers to the practice of agents writing insurance policies primarily for individuals or entities with whom they have a close or personal relationship, such as family or friends. This is a regulatory concern because it can create potential conflicts of interest and raise ethical issues regarding the transparency and fairness of the insurance process.

When agents primarily sell insurance to those in their immediate social circle, it raises questions about whether they are truly acting in the best interest of the clients or simply seeking to benefit personally. Regulatory bodies aim to ensure that insurance agents offer policies based on the best options for their clients rather than on personal incentives.

The regulation surrounding controlled business is primarily in place to promote ethical standards and ensure fair practices in the industry. Other options do not encompass the essence of controlled business as they refer to different scenarios unrelated to the personal relationships that characterize this practice. For instance, insurance sold to businesses, new customers, or at a discount does not inherently involve the same concerns regarding personal relationships and ethical considerations that define controlled business.