Broker vs Agent, how well do you know the difference?
Over 80% of consumers who purchase any types of insurance have no idea there is a difference between an insurance agent and an insurance broker. Especially buyers first purchase second-hand vehicles, they will normally get the insurance from the seller.
Valid Insurance License
According to Hong Kong Insurance Ordinance (Ch. 41), a person needs to hold a valid insurance intermediary license issued by the Insurance Authority (IA) to sell insurance products like general insurance such as travel and vehicle insurance, and long-term insurance such as life insurance.
Almost all first-time vehicle owners do not know if the seller actually holds a valid insurance license to sell you vehicle insurance.
Then when people try to ask more about detail about insurance, they can’t get any reply or detail from them. They simply vanish from the conversation until it’s the time for your insurance renewal. These days, I came across people with the following issues:
- Contact person never reply anything during insured period
- Contact person went missing. Renewal cannot be done.
- Consumer has no idea what’s included in the comprehensive package
All of them have the same answer when I asked them this question – “Do you know if he/she holds a valid insurance license?”, and they replied “No.”
The next thing you need to do, is to validate the person authority.
How To Validate Insurance License in HK?
- Click the link here to access to Hong Kong Insurance Authority webpage
- Select “Search for Individual”
- License Status – select “All”
- Input either a) The person name, or B) the person IA License No.
If the person holds an insurance license, he/she is required to reveal license number.
The next thing you can learn is whether the person you are dealing with, is an agent, or a broker. Following is the definition from Hong Kong Insurance Authority:
Insurance agent
Insurance agents are appointed by insurers to promote, advise on and arrange insurance policies on behalf of the insurers they represent. In general, they can be appointed by a maximum of four insurers, of which no more than two can be insurers authorized to carry on long term business. They are often remunerated by the insurers they represent by way of commission.
Agent has two different license type:
- Individual Insurance Agent
- Represents the insurance company
- Normally sells one insurance company long term insurance product that they represent for
- May sell one or a few more general insurance product
- Technical Representative (Agent)
- Represents the insurance agency
- Sells one or a limited insurance company general and long term insurance products
Insurance broker
Insurance brokers are not appointed by insurers; they act for policyholders. They provide policyholders with suitable insurance advice and represent them in the course of dealing with matters relating to insurance policies, including the application procedure, negotiations with insurers, the arrangement of policies and claim applications. They may approach any insurers in the market without limitation to the numbers of insurers to source the most suitable insurance products for policyholders. Insurance brokers normally receive a commission from insurers as remuneration, or they may charge a service fee to the policyholders.
- License type: Technical Representative (Broker)
- Works under broker company and represents the client
- Assists client to search for multiple insurance companies in the market
Whether you are getting insurance from an agent or a broker, just to keep in mind that it’s important to purchase from a person with valid insurance license. These are the people who can seek assistant for your enquiry in the future. Nevertheless, I also heard that even people with valid insurance license never reply any enquiry.
On top of that, you can purchase insurance directly from the insurance company platform. You will need to handle everything by yourself such as application submission, renewal, and more.
Frequently Asked Questions
1. What is the main difference between broker and agent?
Agent (whether it is technical representative / individual license) normally offers insurance plan from insurance companies that they represent. On the flip side, broker represents the client to look for insurance plan from all different insurance companies.
2. Should I get insurance from broker / agent?
Either one can help you to get any kind of insurance as long as they hold the corresponding insurance license. In the HK insurance field, agent/broker can have three types of license. It’s separated into general insurance, long term insurance and long term insurance with linked investment.
If you are getting a vehicle insurance, the person selling you the vehicle insurance requires a general insurance license.
3. Who will do the support for your policy ?
- Purchase from a broker
Support from the broker firm.
- Purchase from an individual insurance agent
Support from the agent only (normally). Or from the agent’s secretary.
- Purchase from technical representative (agent)
Support from the insurance agency.
4. What if the agent/broker left the company?
- Purchase from a broker / technical representative (agent)
Policy support still remains to get assistance from the broker firm or insurance agency. If the broker/agency no longer holds a valid insurance license, the policy will pass to the insurance company support team.
- Purchase from individual insurance agent
Policy maybe passed to another insurance agent or the insurance company support team.
There are other interesting things about insurance agent such as their “claim rate”, and more.
AXA Travel, Home, Accidential Insurance offer promotion periodically as well as Zurich general insurance.
To purchase automotive tire, batteries and automobile, travel and personal insurance in HK, whatsapp Jimmy +852 5113 0668
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