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Difference between Insurance Brokers and Insurance Agencies

What is an insurance broker?

A general insurance broker is someone who negotiates with several insurance companies on behalf of the client. This is different from what an insurance agency does, which is to execute insurance contracts on behalf of insurance companies.

The Insurance Business Law was revised on Apr 1 1996, paving the way for the introduction of the insurance broker system and the birth of the insurance brokerage business. An insurance broker is allowed to operate an insurance mediation business after he has registered with the Prime Minister Office, deposited a guarantee amount and informed his respective government office.

Insurance broker is legally obliged to advice his client on the most suitable insurance product from among all the insurance products he is aware of.

	Insurance Broker (Independent from insurance company)	Insurance Agency (Entrusted by insurance company)
Entrusted by insurance company Authority given by insurance company	None	1. Establish contrac 2. Receive notice 3. Collect premiums
Overseas insurance arrangements	Hull insurance, Aviation insurance, Reinsurance, Co working with overseas brokers	Not allowed to handle
In the case of damages caused to contractor during product promotion	Independently responsible	Co-responsible with insurance company
Best Advice Obligation	Yes (legally obliged)	None
Insurance company's choise	Not allowed to be restricted to any consignment insurance company	Select from consignment insurance companies
Concurrent business	Not allowed to work as agency	Not allowed to work as broker

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