Insurance, Intermediaries, and Your Coverage

Insurance can often seem straightforward.

You go to the insurance company, you ask for a car insurance, or health insurance policy, you pay them money and you get your protection. But it important to remember that, when purchasing insurance in Hong Kong, you have a wide range of choice with regards to both policy types, and who you buy your coverage from.

The first thing to understand is that not all insurance “companies” are the same.

Insurance Companies in Hong Kong

When you go out to buy something like home insurance in Hong Kong, you’ll probably get on the internet and do a search for “home insurance” or you’ll ask your friends and they’ll tell you the name of the company they got their home insurance from.

If you’re not fluent in Insurance, then one insurance company is going to look virtually identical to the next – they all provide insurance, after all! When you receive the “home insurance” search results, all the companies you are being given all offer car insurance, and often very similar home insurance products. But, depending on which organization you contact, you could have a very different experience with how you are sold to, advised, and ultimately supported across the lifetime of any insurance policy.

Underwriters – The Insurance Companies

If you say the words “Insurance Company” to someone, they are likely going to start thinking about underwriters. Underwriters are the traditional “insurance companies” of the world. These are the organizations that are carrying the risk of any insurance policy you purchase, and who will pay your claim in the event that you experience a covered loss.

Insurance Underwriters are typically extremely big organizations with significant finances and large workforces. While this can be a benefit in that you, as a customer, receive access to extensive support networks and experts to help assist you during a crisis, the size of many underwriters can also be frustrating to customers. Automated telephone trees, constant employee turnover, and the existence of your insurance as a simple policy number means that it can be easy to feel like your needs and concerns don’t matter to a big insurance underwriter.

As such, many people looking at insurance will turn to Insurance Intermediaries.

Insurance Intermediaries in Hong Kong

Insurance intermediaries are companies or individuals that have been licensed by the Hong Kong Insurance Authority to advise the general public with regards to insurance.

This seems simple enough, until you realize there are actually different insurance intermediaries in Hong Kong, and that the different types of intermediary will go about providing insurance services in very different ways.

Hong Kong Insurance Agents

Insurance Agents in Hong Kong are typically limited to working with a maximum of 4 different insurance companies. 

Of the possible 4 insurance companies, or underwriters, which an agent is able to work with they cannot offer plans from more than 2 Life Insurance companies.

This is due to the fact that Insurance Agents in Hong Kong are actually contracted to the insurance underwriter – in effect, they are operating as an extension of the underwriter and represents the interests of the underwriter, in addition to their own business interests.

Under Hong Kong law, there is no obligation for an Insurance Agent to represent the interests of the individual purchasing insurance. This means that, in order to maintain their business relationships with the Underwriters, Agents more often than not represent the interests of insurance companies when a customer purchases coverage.

Hong Kong Insurance Brokers

In contrast to Agents exist Insurance Brokers.

Under Hong Kong law insurance brokers represent the interests of the customers they work with – not the insurance companies. This is an important distinction that separates agents from brokers in Hong Kong; the legal obligation that a broker has towards customers.

In other jurisdictions, like the USA, this obligation would be called “a fiduciary.” In the USA a fiduciary cannot act out of self-interest. In Hong Kong this is the case for insurance brokers – the requirement exists at all times to act in the customer’s interests, and this is regulated by the Hong Kong Insurance Authority.

While agents are contracted to a maximum of 4 different insurance underwriters, there are no such limits placed on brokers – who are free to work with as many different insurance providers as they choose. This means that customers are, generally, able to access a much wider range of choice when it comes to the insurance policies they may be purchasing.

Intermediary Fees and Payments

One area in which brokers and agents are almost identical in the Hong Kong insurance market is with regards to how they make money – both types of insurance intermediary will take a commission from the sale of any insurance product. This means that they will make money any time you purchase coverage with that company.

In some cases, a broker may choose to work for a fee, instead of a commission.

But in all situations, when purchasing an insurance policy through an intermediary in Hong Kong, that intermediary will be required to disclose the fact that they make a commission prior to you purchasing a policy.

Your Insurance and CCW Global

There is no “right way” to purchase insurance in Hong Kong – the market exists for you to make the choice that is correct with regards to your specific needs. While there are both good and bad agents, brokers, and underwriters, it is entirely up to you to choose the method and manner in which you purchase insurance.

CCW Global Ltd is a registered Hong Kong insurance broker, authorized and regulated by the Hong Kong Insurance Authority.

Our independent and expert brokers can assist you in finding the prefect insurance coverage for your needs. Whether this is Car or Home Insurance, or business products like Employees’ Compensation or Professional Indemnity cover, we can provide you with in-depth comparisons from a range of leading insurance underwriters best positioned to provide exceptional cover.

CCW is also able to provide extensive support to you over the lifetime of your policy – with dedicated claims and renewals on time to assist in the day-to-day management of your plan, ensuring your coverage never lapses and the policy is always doing what it is supposed to do.

For more help with insurance in Hong Kong Contact CCW Global Today.

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