1. There are two types of insurance intermediary, namely "insurance agent" and "insurance broker". What are the differences in their roles/functions and qualifications? Are they required to be registered before performing their work?
Most people have their insurance matters dealt with through an insurance agent or broker. Acting on behalf of the general public, insurance agents and brokers advise and arrange the purchasing of insurance. They also prepare reports, keep records and in the event of a loss, help the policy holders to submit and settle a claim.
There are two types of insurance agents: independent agents and employed agents.
Independent agents are self-employed and represent insurance companies and earn a commission on the policies that they help to write. In Hong Kong, independent agents are restricted to representing no more than four insurance companies. No more than two of them can be life insurance companies.
On the other hand, there are employed agents who work exclusively for one insurance company. In addition to being paid a basic salary, they also earn commission on the business that they bring in.
Insurance agents are required to be licensed and supervised by the Insurance Authority in accordance with the Insurance Ordinance (for more details, see question 2). To check the identity of an insurance agent, you may visit the Register of Licensed Insurance Intermediaries maintained by the Insurance Authority.
To be licensed, insurance agents are required to pass the Insurance Intermediaries Qualifying Examination conducted by the Vocational Training Council, unless they are exempt. To ensure professional standards, they are also required to attend continuing professional development programmes as a condition for the renewal of their licence.
An insurance broker exclusively represents the insured person (but not the insurance company). On behalf of the insured person, the broker searches insurance companies for the best available coverage suitable to the needs of the insured person. Usually, this type of insurance relates to commercial activities, the coverage is specialised, and the insurance is for a large amount.
A broker might be a company or a person, working on a commission basis.
An insurance broker must be licensed by the Insurance Authority in accordance with the Insurance Ordinance.
A broker which is a company must meet the minimum requirements set out in the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L), the most important of which are:
- having a minimum capital and a minimum net asset value;
- having professional indemnity insurance; and,
- keeping proper books and accounts and separate accounts for each client.
Also, the responsible officer of a broker company is also subject to several minimum requirements to ensure professionalism of insurance brokerage (for more details, see question 2).
In addition, the technical representatives of a broking company, have to passed the qualifying examination, unless exempted, in order to be licensed and be required to attend professional development programmes. For more details, see question 2.
Lastly, a person or company is not permitted to act as an agent and a broker at the same time.