A Florida 2-20 General Lines Agent is explaining the concept of 'controlled business' to a new agent. Which of the following statements accurately describes the limits on controlled business for a Florida agent?
- AAn agent may not write more than 75% of their total commissions from controlled business in any 12-month period.
- BAn agent may not write more than 25% of their total commissions from controlled business in any 12-month period.
- CThere are no limits on controlled business as long as the agent fully discloses the relationship.
- DAn agent may not write more than 50% of their total commissions from controlled business in any 12-month period.
Show answer & explanationAnswer & explanation
Correct answer: D. An agent may not write more than 50% of their total commissions from controlled business in any 12-month period.
Florida law defines controlled business as insurance written on the agent's own life, property, or business, or that of their family or employer. An agent may not write more than 50% of their total commissions from controlled business in any 12-month period. This prevents agents from primarily obtaining a license simply to insure themselves or closely related entities.
Why the other options are wrong
- A. 75% is too permissive; the limit is 50%.
- B. 25% is too restrictive; the limit is 50%.
- C. There are clear statutory limits on controlled business to prevent abuse of the licensing privilege.
Controlled Business Limits (Florida)
Controlled business refers to insurance written on an agent's own interests or those of close family/employer. Florida law limits the amount of commission an agent can earn from such business.
- Insurance on agent's own life, property, or business.
- Also includes spouse, children, employer, or employee.
- Commissions from controlled business cannot exceed 50% of total commissions.
- Measured over a 12-month period.
- Prevents individuals from obtaining licenses solely for personal gain.
Memory trick: Half your commissions, half of you, are controlled business.