When is controlled business legal?

Controlled business refers to the insurance sales that an agent or broker makes primarily from their own interests, such as insuring their own property or the property of family and friends. This practice can lead to potential conflicts of interest. In Ohio, the legality of controlled business is defined by how it is managed regarding commissions.

The correct answer highlights that controlled business is legal when the commissions earned from it do not exceed the total commissions earned from all other business. This stipulation ensures that insurance agents do not rely solely on their own interests for income, promoting fair competition and protecting consumers from potential bias in the offerings presented by the agent. By keeping controlled business commissions under this threshold, it maintains a balance that discourages unethical practices and ensures that the primary focus remains on serving a broader clientele rather than primarily personal interests.

The other options suggest different thresholds or conditions that do not capture this crucial balance. Simply having controlled business make up less than 50% does not account for the actual commission values, and stating that it is always legal with proper documentation overlooks the need for a specific limitation on commissions. Additionally, the absence of complaints does not determine legality; it merely suggests customer satisfaction without addressing the underlying commission structure that governs controlled business. Thus, the emphasis on commission limits