What is an insurance broker's role?

We can describe an insurance broker as a “trusted advisor” noting that he/she represents the interest of the clients, providing insurance broking expertise.  Insurance brokers use their professional knowledge and experience to help insurance buyers to assess their unique insurance needs through:

  • understanding of clients and their needs;
  • conducting risk analyses; 
  • designing customized and comprehensive solution insurance policies;
  • advising products and options for clients;
  • soliciting insurers’ support;
  • negotiating terms and premiums;
  • providing insurance and risk management advice;
  • assisting insurance buyers to handle claims and policy administration.  


Importantly, insurance brokers are the legal representatives of their clients, and the interest of their clients must come first and take priority over all other issues when advising clients or placing insurance on their behalf.


What are the primary differences between an insurance broker and an insurance agent?

Both insurance brokers and insurance agents act as intermediaries between insurance buyers and insurance companies, they both must also have the appropriate licenses to distribute the insurance they are selling, while also adhering to regulations enforced by Hong Kong Insurance Authority. 


However, insurance agents in Hong Kong are a sales force who each represents up to only four insurance companies (of which no more than two can be life insurers) to sell insurance products to insurance buyers for a commission. They represent the insurance companies in the transaction.  Insurance agents help insurance buyers select insurance products to buy and handle an insurance transaction from start to finish.  


Insurance brokers on the other hand are professionals who represent the interests of insurance buyers (mainly corporations). An insurance broker’s primary duty is to the insurance buyer who is his client.  Insurance brokers may charge a fee for their services, or they may receive a commission from the insurance company as their remuneration.


Why use an insurance broker?

Insurance brokers design customised insurance and risk management programmes for their clients' business, where they design the policies, negotiate the terms with insurance companies and place the cover with the most suitable insurance company.


Insurance brokers will find their clients the best deal on insurance because they have a thorough understanding of the insurance market and large market share which enables them to negotiate premiums on behalf of insurance buyers.


Insurance brokers are able to access many insurance companies and different insurance products from both direct insurance and reinsurance markets. 


Insurance brokers do not work for the insurance companies, so their recommendations are unbiased and to the benefit of the insurance buyer. 


Insurance brokers may specialise in one specific type of insurance or industry, or they may deal with many different types of insurance. Specialty insurance brokers have acquired in depth knowledge of a specific type of insurance or industry to provide more focused risk solutions to certain businesses and industry’s specific needs.