Insights from your local insurance broker in China – who we are and what we do
I am Marc Burban, founder of Asian-Risks Management Services. We are an insurance broker specializing in general insurance. General insurance provides coverage in every situation where an accident may occur. We help our clients mitigate the risks they face through insurance coverage, combining our international and local expertise.
What is an insurance broker?
An insurance broker is an independent professional advisor who is an expert in risk and insurance. He is independent from insurance companies and works on behalf of his clients. The duty of an insurance broker is to provide advice on purchasing decisions with regards to insurance coverage. An insurance broker must have good communication skills when dealing with clients and insurance companies, to make sure the latter has a full understanding of the risks of the client so in case of claim there will be no hole in coverage due to non-disclosure of information.
What are the characteristics of the local market that makes the work of insurance brokers in China different from the rest of the world?
First of all, the number of brokers in China is relatively small. In 2018, there were about 500 licensed brokers in China.
The cost of the license to an insurance broker in China is pretty high. For the nationwide license, the cost is 50 million RMB (about 7.5 million US Dollars) and a local license costs about 10 million (about 1.5 million US Dollars). Hence, costs for an insurance license in China are even higher in Europe or the US.
China’s broking industry is early in development
Second, the broking industry in China is at its early stage of development. It is a mix between what we can see in the developing countries and what we can see in the emerging countries.
The things common in what we can see in emerging countries is there is one batch of brokers that belong to a specific industry, for instance, power companies, railway companies.
Large companies own their in-house broker. In this case, the broker is mainly taking care of the business or the group or taking care of all the companies affiliated to the group.
The second kind of broker is deals with privately owned companies, so in this case it is similar to what we can see in developed countries. These brokers are more involved in mass market products mainly providing services online. So, they distribute products through online platforms.
Brokers form international networks
There is another kind of privately owned broker, which is a broker or a member of an international network. In the broking industry, apart from international brokers, there is another form of organisation which is an international network of insurance brokers. Small to medium-size insurance brokers from all over the world get together; form a network to provide services to other members of the network everywhere in the world. So, some local brokers like us, for instance, are a member of a network and we provide service to brokers affiliated to this network. In my case, this would be providing services in the Chinese market.
Less medium and small companies in China use brokers
In China, it’s not so common especially for small to medium sized companies to use a broker. One of the reasons as I mentioned above, is due to the number of brokers being very limited. For instance, in China, the coastal region from Guangdong, to Fujian, Jiangsu, Shandong, is probably one of the most industrial parts of China, yet the number of brokers is less than 200. So, most of the small to medium sized companies are getting used to deal directly with insurance companies. Hence, as a broker, we have to let them know what is our added-value.