“Kyobo Life Planet sold a lot of group meal insurance (mini insurance), but to be honest, we couldn't recover our operating costs, such as advertising expenses, labor costs, and other expenses. Mini insurance has a low premium per case, so even if we sell it, the revenue is low, and to attract more customers, we have to spend more on advertising, which creates a vicious cycle. Mini insurance is too fatal for digital insurers.”
Kim Young-seok, the CEO of Kyobo Life Planet, explained this during an interview with ChosunBiz at the company's headquarters in Yongsan, Seoul, on the 14th of last month, regarding the reason why Kyobo Life Planet has never recorded a profit. He stated that digital insurers relying solely on advertising cannot make revenue by selling inexpensive mini insurance priced around 10,000 won. Established in 2013, Kyobo Life Planet is the first and only digital life insurance company in South Korea and has yet to turn a profit.
CEO Kim believes that Kyobo Life Planet must restructure its portfolio with high premium products like critical illness, dementia, and health insurance, similar to long-term insurance, to survive. He judged that guiding customers to sign up for insurance directly on the website, while advisors provide advice through chat or phone during the process, is appropriate for selling long-term insurance. Long-term insurance has a payment period of more than three years and requires the proper design of dozens of riders, necessitating human assistance. The aim is that there is no need to insist on a 'fully digital' process without human involvement.
CEO Kim said, “Thinking that we would sell insurance in a fully digital manner has resulted in products becoming simple, easy, and fast, like mini insurance, leading to lower premiums. For insurers to survive, we must sell long-term insurance at a proper price.” He also noted, “It seems the only remaining challenge is how much we can sell high-premium products in an omnichannel setting.”
To strengthen long-term insurance sales, CEO Kim established and implemented a 'reboot' strategy after taking office. He increased the number of advisors to over 20, enhancing the consulting platform so that customers can ask questions via chat at any time. The advisors are employees of Kyobo Life Planet and are not insurance planners. Since there are no commissions paid to planners upon enrollment, it helps secure price competitiveness compared to other companies.
In particular, Kyobo Life Planet plans to focus on selling products that feature both main contracts and riders rather than just main contract products to innovate its offerings. Previously, they sold only whole life insurance that paid out death benefits (main contract), but now they intend to sell whole life insurance where customers can choose various coverage options, such as cancer, brain, and heart disease diagnosis benefits.
This reboot strategy has shown effects since last year. In the previous year, Kyobo Life Planet's initial premium income was approximately 840 million won, which is more than three times the previous year (270 million won), according to preliminary counts. The number of new contracts also increased about twofold during the same period. As the premiums increased, the performance improved.
CEO Kim stated, “Kyobo Life Planet will also sell products with a main contract and riders similar to other competitors. Although the product structures are similar, I want to let customers know that they now have alternatives as price comparisons become possible.”
CEO Kim previously helped establish KakaoBank after working with consulting firms Accenture and EY Han Young. He then served as Chief Technology Officer (CTO) and Chief Operating Officer (COO) at AIA Life Insurance and recently was the Chief Strategy Officer at SK bioscience before being appointed as CEO of Kyobo Life Planet in December last year. Below is a Q&A with CEO Kim.
―You are the first external hire among the past CEOs of Kyobo Life Planet. What potential did you see in joining the company?
“I have a lot of experience in management consulting. I have helped set up internet banks and participated in the digital transformation of securities and card companies. I found it puzzling that the insurance sector has not been able to benefit from digital advancements, but I believe it's only a matter of time before insurance transforms into digital as well. If I can expedite the shift towards digital life insurance by even a year by participating in this company, it will be a fulfilling experience.”
―You launched as the first digital insurer in South Korea in 2013. However, you have never turned a profit. What do you see as the issue?
“I believe it was a mistake to define the digital market as a fully completed model. The idea that all processes must be conducted digitally has resulted in products being either low-cost mini insurance or centered on main contracts. While this market was projected to grow by 11% over the past ten years, it has actually stagnated with just 0.2% growth. In contrast, the omnichannel market where customers received assistance from advisors when signing up for insurance online has seen growth of up to 8%. The remaining challenge seems to be how many high-premium products we can sell in this omnichannel; it resembles how internet banks transitioned traditional deposits, savings, loans, remittances, and foreign exchanges to digital.”
―There is a prevailing view that it is difficult to sell products with high premiums and long payment periods digitally.
“Nowadays, architectural design can be done alone, so why shouldn't insurance be designed independently? We improved the application so that customers can join insurance on their own. However, no matter how simple it is, when detailed explanations are provided, customers will have questions and will need someone to ask. Without humans, I feel that digital transformation is just an empty promise. While customers can independently enroll in insurance, we have strengthened the consulting platform so that they can receive advice via chat or phone if necessary. With this structure, the sales commission that customers must pay is abolished. This allows customers to solve their problems independently and benefit from it.”
―What are the differentiating factors of your products?
“Kyobo Life Planet has been selling products with only main contracts. Naturally, these have lower premiums than competitors' products with riders attached to the main contracts. This creates a problem for customers who wish for various coverages, forcing them to enroll in multiple products. Many customers leave after enrolling in just one main contract product. To resolve this, we completely overhauled the system to convert the product structure to include both main contracts and riders. As our products have become similar to those of competitors, the possibility for price comparisons has emerged. If a customer receives a quote from an insurance planner, they should also compare prices under similar conditions with Kyobo Life Planet before signing up. Customers will realize that they now have alternatives.”
―There is a strong perception that health insurance products only sell when insurance planners first approach customers to discuss the need for enrollment. How feasible is it for digital insurance companies to bridge this gap, relying only on advertising?
“Attracting customers through digital advertising increases expenses exponentially. The key is how to create a low-cost customer acquisition structure, which requires partnerships with various platforms. Last year, we formed sales partnerships with Naver, Kakao, Toss, as well as InsurTech companies, banks, and health promotion platforms, making expected growth possible. Rather than seeking new partners, we plan to strengthen relationships with existing partners to generate results. In fact, we successfully sold dementia insurance through a bank's mobile app (mobile bancassurance), resulting in a 'medium hit.' This confirmed that even as a digital insurer, we can sell complex and difficult products.”
―What are your plans for the future?
“An important task for this year is globalization. There are not many companies that sell life insurance digitally. Having been in digital life insurance for over ten years, I have received quite a few 'love calls' from Asia. I also participated as a panelist in an insurance conference named 'InsurTech Insight' last December. The chances are low, but I am looking at the export opportunities for 'K-digital insurance.'”