What is the difference between an insurance company and an insurance brokerage company

June 15, 2021


Isn’t every company that sells insurance policies called an insurance company?


Insurance companies refer to companies that will launch their own new products (insurance plans). These companies usually have a larger scale. They will arrange everything from product development, front-line sales, underwriting, claims, complaints, and actuarial calculations. To ensure compliance with the requirements of insurance industry regulations and ethical standards. These companies will arrange their own staff to sell insurance policies, and will also cooperate with some insurance brokers to outsource the sales work to them. Common insurance companies include: Manulife, Prudential, China Life, AIA, etc.


An insurance company can also be called an “Insurer”, because the insurance company is the one who provides protection behind all the insurance policies on the market. If you need to make a claim, the one who pays is the insurance company. The person who purchases the policy is the “Policy Holder”. In the insurance industry, the word “person” does not necessarily mean a natural person with flesh and blood and human organs. “Person” can represent both a company and a natural person. Therefore, “insurer” and “Policy Holder” are not necessarily natural persons.


What is an insurance agent?


As mentioned earlier, insurance companies will also sell their own insurance products. Insurance agents will be categorized into independent agents or hired agents. In many cases, insurance companies will “appoint” some “Insurance Agents” to sell insurance policies. Speaking of entrustment, in fact, these insurance agents are not the “employees” of the insurance company, and the relationship between the two is a cooperative relationship, and the agents are self-employed to complete the sales tasks for the insurance company, therefore the the saying “employed” insurance agents that is commonly said in the market is not necessarily accurate. Insurance agents can also refer to an agency company or an agent that is a natural person. 


Insurance agents represent the insurance company to open up the source of customers, provide the company with services such as selling insurance products and answering claims issues for customers. It mainly represents the interests of insurance companies, not the interests of policyholders. Insurance agents generally only sign cooperation agreements with one or several insurance companies. If the agent only cooperates with one insurance company, the two contracts will specify that the agent can only sell the products of that particular insurance company. Insurance agents mainly sell long-term insurance such as life insurance and critical illness insurance, so they can get more support from insurance companies.


Insurance broker? Is it a role like a star manager?


Insurance brokers and star managers have completely different meanings and roles. As mentioned above, the term Insurance Brokers can refer to companies or individuals. Insurance brokers are companies that sell other people’s insurance products. Usually, a brokerage firm will cooperate with more than one insurance company. The broker can provide products from multiple insurance companies for customers to choose from. After the insurance policy is sold, the insurance company will share the profits with the insurance broker company. Common insurance brokerage companies include: Convoy, Everbright Sun Hung Kai, AMTD, etc.


The insurance broker selects suitable insurance products on behalf of the client. The word “ insurance broker” can refer to an individual or a company. It is completely independent in identity and does not represent any insurance company. General insurance uses brokers to contact customers, such as car insurance, marine insurance, and fire insurance, which mainly represent the interests of policyholders rather than the interests of insurance companies. Insurance brokers have cooperative relationships with multiple insurance companies. For a broker, the more insurance company products they can sell the better. They do not have exclusive sales agreements with insurance companies. Therefore, insurance brokers have an advantage in product diversity and can objectively provide customers with products from multiple companies for purchase.


What does insurance intermediaries mean?


Insurance intermediaries generally refer to insurance agents (individuals) and insurance brokers (individuals), because these two types of persons only promote insurance company products to customers, and do not directly contract with customers or provide insurance compensation.


Where can you buy insurance? 

As long as you are able to find an insurance intermediary who is willing to thoroughly explain the products they are selling (agents, brokers, or insurance salespersons in banks are also included in this instance), you will be able to buy an insurance plan that suits your needs with a peace of mind. You can ask friends if they have any recommended insurance intermediaries, if not, you can try to take initiative and do some searching on the web.   

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