An insurance broker is a professional intermediary between clients (policyholders) and insurance companies. They advise individuals and business clients on the insurance coverage required for specific risks.
Insurance broking companies consist of various insurance brokers who are experts in personal or business insurance. Those agencies and professionals ironically have their own risks and must purchase their insurance.
Like any expert and company, the risks can destroy the business and career if not handled professionally. Hence the article will explain what insurance is needed by insurance brokers and agencies in Hong Kong.
Top Insurance for Insurance Brokers in Hong Kong
Professional Indemnity Insurance
Insurance brokers communicate with clients to understand their risks and then use the information to advise and provide them with a policy. Clients trust brokers and agencies to provide the best insurance with the highest coverage. A large amount of information is needed to generate a policy with adequate coverage and limits. However, what if the insurance expert collects and inputs the wrong information?
False input of information is the most common error among insurance agencies. In fact, 40% of insurance agency errors and omissions claims are false information on certificates of insurance. When insurance brokers input wrong information, it can cause invalid or reduced coverage.
It is the broker’s job to recheck the information and ensure every detail is correct. Other errors include suggesting the wrong insurance policy (false information) or not communicating all insurance exclusions (misrepresentation). Clients can act against insurance brokers and agencies if their error or negligence results in any form of loss.
Errors could occur at any point and are common in every profession. Insurance brokers in Hong Kong should purchase professional indemnity insurance to cover their liability risks. The insurance will financially cover claims due to the insurance broker’s negligence or error. Professional indemnity insurance is vital for insurance professionals and can save experts from millions in loss.
Cyber Insurance
Insurance brokers collect information from their clients and store them electronically on insurance agency software systems. The information includes company and personal details. Most of the information is confidential, sensitive, and clients trust the insurance experts to protect the data provided.
Insurance agencies have always been at risk from cyber-attacks due to the sensitive data they store. Cybercriminals know they have much to gain when they hack and infiltrate the insurance industry. Cyber-attacks can lead to data breaches, financial loss and damage to client trust.
The cyber-attacks can appear in the form of phishing emails, ransomware or AI attacks. Cyber security may not be enough anymore due to how innovative attacks have become. Hence Insurance brokers and agencies must purchase cyber insurance to deal with the impact of a cyber-attack. The insurance will cover cyber experts’ advice, threat removal, data recovery, informing third parties and financial loss.
The insurance will help protect all the data the businesses have been trusted with, even if attacked.
Director and Officer Insurance
Insurance broker companies consist of CEOs, CFOs, managers and junior staff. The senior staff are known as directors and officers, who are responsible for making decisions that benefit the company. They are liable for numerous management duties and have access to countless client data and company details.
Investors, board members, employees and even the authority expect the management staff to manage the company successfully while following regulations. Though, there are instances where managers stray from the company mission and begin to focus on their personal benefits.
An insurance business may be sued if a manager breaches the fiduciary duty, misuses company funds or fails to comply with regulations. For example, investors can sue a manager and the company when informed about a manager manipulating invoices and collecting overcharged funds.
Even if it is the action of just one manager or accidental, the whole company and the management team may be liable. Insurance broker agencies in Hong Kong should have director and officer insurance to cover the management team. The insurance will cover company managers to protect them from claims resulting from alleged wrongful acts. The insurance will not cover if the managers are guilty of illegal criminal acts.
Public Liability Insurance
Insurance brokers meet clients daily in the business office or public areas (café/restaurants). The meeting consists of both parties discussing the need for insurance and personal or business risks. While consulting about risks, the insurance broker and business may be affected by public liability risks.
Public liability risks include third-party injury or property damage due to the business activity. For example, a client falling in the office meeting room or the insurance broker accidently damaging a client’s/ public property during the meeting. These risks can lead to the third party suing the professional and insurance business.
Insurance broker firms in Hong Kong must purchase public liability insurance to cover public liability claims. The insurance will cover lawsuits due to third-party injuries or property damage due to business activities. Public liability claims could affect any business and are always unpredictable.
Benefits Of Insurance for Insurance Brokers and Agencies in Hong Kong
Insurance brokers and agencies are insurance experts and should understand why they need these insurance mentioned. The proper combination of insurance can help deal with the impact of unwanted insurance industry risks.
The insurance will provide financial protection, so the insurance business doesn’t have to face financial loss. The protection will allow the company to recover from even the worst lawsuits and rebuild its reputation.
Having insurance also provides the peace of mind of knowing that there is always a cover for various risks. The insurance brokers in Hong Kong can focus on providing the best service rather than worrying about unforeseen threats.
To Learn More about business insurance and protect your insurance agency in Hong Kong & Asia, contact Red Asia Insurance.
