The influence of general insurance agencies (GA) is growing in the insurance industry. If a GA does not sell products from a specific insurance company, the sales of that company can plummet. An official from one insurance company said, "Now the GA holds the leash of the insurance company." Unlike exclusive agents affiliated with a specific insurance company, GA-affiliated insurance planners can sell products from all insurance companies.
According to the insurance industry on the 24th, the GA sector has communicated to field sales that they will postpone incentives given to planners for selling Samsung Life Insurance products by one year. This essentially declares a "boycott" against selling products from Samsung Life Insurance, a leading company in the insurance sector. This decision reportedly arose from a meeting of GA representatives, not the GA association.
The boycott is due to a commission reform proposal presented by financial authorities. A GA industry representative explained that the reference to a boycott is intended as a plea for Samsung Life Insurance, a major player in the insurance sector, to voice opposition against the commission reform proposal alongside the GA sector. Currently, the insurance industry and the GA sector are operating a task force (TF) to discuss the commission reform proposal.
The insurance industry predicts that the boycott will have significant repercussions if it materializes. While Samsung Life Insurance has a high proportion of exclusive agents, there is a considerable chance that sales will decrease if the 280,000 GA planners do not sell products. According to the Korea Insurance Research Institute, 67.9% of life insurance company sales and 46.3% of non-life insurance company sales were generated by non-exclusive sales organizations (GA, bancassurance, etc.) in terms of initial insurance premium in 2023.
This is not the first boycott by the GA sector. Previously, when Hanwha Life Financial Services refused to participate in the agency self-regulation agreement in 2023, the GA sector initiated a boycott against Hanwha Life. Ultimately, Hanwha Life Financial Services joined the self-regulation agreement.
Until now, planners have typically been appointed by specific insurance companies and sold only those companies' products. However, in recent years, the separation of manufacturing and sales has taken hold, changing the situation. Insurance companies have focused on product development while reducing the scale of exclusive agents, assigning the responsibility of product sales to GAs. Consequently, as of the end of 2023, the proportion of GA planners among all planners has increased to 43.4%, while the proportion of exclusive agents has decreased to 27.2%.
Insurance companies are in a position where they must encourage GAs to sell products by raising incentives paid to GA planners. An insurance industry representative said, "When sales drop, they ask the GAs why the products are not selling, and they hear it is because the incentives are low or the products lack competitiveness," adding, "To meet target sales volumes, incentives or collateral need to be increased." He noted, "GAs often demand that insurance companies raise their incentives, and given their influence, it is difficult to simply ignore those requests."
The GA sector is also pushing for a bill to grant GAs qualifications as specialized sales companies under the Insurance Business Act. This means they aim to receive an independent legal status. If GAs transform into specialized sales companies, their influence in the insurance industry is expected to expand further. However, the GA sector remains in a subordinate position, as they have recently been unable to participate in the insurance reform meeting led by financial authorities.