How is the term 'controlled business' defined in the insurance context?

In the insurance context, the term 'controlled business' specifically refers to insurance that is primarily sold to individuals that an agent has a close personal relationship with, such as family and friends. This definition highlights the potential conflicts of interest that can arise when agents are incentivized to sell policies to those they know personally rather than to a broader clientele based on objective needs.

For instance, regulations are often put in place to limit the proportion of an agent's business that can be classified as controlled business to prevent them from benefiting disproportionately from sales made to their personal network. This ensures a fairer marketplace and mitigates the risk of unethical practices such as prioritizing personal relationships over the best interests of clients.

The other options do not accurately capture the essence of what 'controlled business' means within the insurance framework. High-risk clients and commercial entities pertain more to the nature or focus of the policies rather than the relationships involved in the sales, and the characterization of insurance as highly regulated is a general description of the industry rather than a specific definition of controlled business.