When Agent Todd earns 20 percent of his total commissions from life and health insurance written for his relatives and friends, what has he engaged in?

Agent Todd has engaged in controlled business, which refers to situations where an agent or insurance producer earns a significant portion of their commissions from policies sold to their own relatives or friends. This is an important concept in the insurance industry because it can raise concerns regarding conflicts of interest and regulatory compliance.

In controlled business scenarios, there is a potential risk that an agent may prioritize personal relationships over the best interests of the clients. Because most regulatory bodies, including those in Nebraska, closely monitor controlled business practices, they often place restrictions on the percentage of commissions that can be derived from such transactions. By delineating these relationships, regulators aim to ensure that agents maintain professional standards and avoid exploiting personal connections for financial gain.

While other choices, like self-employment, charitable contributions, and referral business, may involve valid practices in insurance sales, they do not specifically address the issue of earning commissions from policies sold to individuals within one’s personal network. Consequently, these alternatives do not accurately capture the nature of Agent Todd's earning scenario, making controlled business the most appropriate answer.