The 3 Main Types Of Insurance Companies In Hong Kong (And Their Pros & Cons)

In Collaboration With CCW

If you are looking for insurance in Hong Kong then you have a lot of choice with regards to your coverage. From the range of products on offer, with policies available for literally every conceivable type of risk, through to the company or individual you choose to purchase insurance from, sometimes you may have too many options! Simply determining where to go to get insurance can be hard. From deciding whether you should contact an Agent or a Broker, or even if you should go directly to the insurance company for help, in some cases just navigating the insurance ecosystem is difficult.

Deciding where to go to purchase insurance is largely a matter of preference, but there are benefits to using an intermediary when it comes to taking out your coverage in Hong Kong.

There are three main types of insurance company in Hong Kong (underwriters, insurance agents, insurance brokers).

The Insurance Underwriters

The first, and probably most obvious, form of insurance company in Hong Kong are the Underwriters. These are the companies that create the insurance products available on the market – it will be the underwriter’s logo, in most cases, on the top of your insurance policy documents.

Underwriters are, in most cases, extremely large businesses with offices around the world and exceptional financial strength. However, these companies are only able to sell the products they offer.

For example, if you were interested in a Health Insurance plan from Bupa, then you would only be able to purchase that policy from Bupa – you would not be able to purchase a Bupa plan from a competing health insurance company.

This means that working with an underwriter directly limits your choice when it comes to selecting your coverage. Further to this, most underwriters are usually highly specialized, offering coverage solutions for a selected range of risks. Should you require additional coverage beyond an insurer’s scope, you would be forced to contact an additional underwriter to manage your risks.

The Insurance Agents

An insurance agent is an individual or business granted a license by the Insurance Authority to advise on one or more types of insurance as an agent of any authorized insurer. Simply put, an insurance agent is the agent of an underwriter. Insurance agents work for, and are contracted to the insurance underwriters; they are able to advise only on the policies and products of the principal underwriters and, importantly, do not work on behalf of customers requesting insurance.

In Hong Kong insurance agents have no fiduciary duties – they are not, after all, agents of the client. Insurance agents are bound only by Hong Kong law and the sales practices and procedures of their contracted underwriter. There is, when dealing with an insurance agency, no legal responsibility or obligation to ensure that a customer is purchasing the best possible form of coverage for their needs.

Choosing to work with an agent can be a simple way to obtain insurance; agents are generally experts on the products and policies they work with and are extremely efficient at placing coverage. However, this normally comes with an absence of choice and the possibility that the customer is not the immediate priority.

The Insurance Brokers

Insurance brokers are not directly contracted to any single insurance underwriter, and under Hong Kong law are legally obligated to work for customers and not the insurance companies. Under Hong Kong law, a broker is contracted as an agent of the policyholder. This is fundamentally different to agents who are agents of any authorized insurer, and means that you are guaranteed to receive advice in your best interests.

Brokers enter into distribution arrangements with underwriters which allows the broker to offer a wide range of insurance options to customers. While brokers are not inside any single underwriter’s ecosystem, they are generally extremely knowledgeable about the relative benefits to any contrasting products.

Hong Kong Insurance Brokers offer a wide degree of flexibility and choice when compared to Underwriters or Agents, and working with a broker generally gives customers the widest range of choice in regard to their coverage.

How To Choose the Right Insurance Company

The type of Hong Kong insurance company you choose to purchase your coverage from will largely be the result of personal choice and your current coverage situation. There are benefits and drawbacks to using each type of insurance provider – whether you decide to go directly to an underwriter or opt to contact an intermediary in the form of a broker or agent.

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