The market share of life insurance companies' cyber marketing (CM) and telemarketing (TM) channels fell last year. In contrast, the sales proportion of face-to-face sales channels, such as general agents (GA), increased. There are concerns that the digital transformation, which has been called for over the past few years, is far from being realized.
According to the Korea Life Insurance Association on the 28th, the number of new contracts for life insurance companies last year was 8,886,796, a 24.9% increase from the previous year (7,111,900). The monthly average first premium, a profitability indicator, rose by 26.5% during the same period from 1.2188 trillion won to 1.5418 trillion won.
The share of new contracts through the CM channel among total new contracts was 2.28% last year, down from 2.5% the previous year. The proportion of the total first premium from CM remained stable, slightly increasing from 1.14% to 1.23% during the same period. Although the absolute number of contracts sold through CM decreased, profitability was maintained as the premiums per contract were set high.
The CM channel refers to customers accessing the insurance company's website and signing up for products directly. This allows insurance companies to reduce business costs while customers can enroll in lower-premium products. Because it bypasses insurance agents, there are no commissions to pay to agents.
However, as insurance companies focus on selling highly profitable long-term life insurance, the CM channel is naturally shrinking. Long-term life insurance often requires premium payments for more than 10 years after signing up and necessitates selecting dozens of riders tailored to the customer's situation, making it difficult to enroll without expert assistance. These limitations have been pointed out since the onset of the insurance industry's digital transformation, yet they remain unresolved.
The TM channel, which involves explaining products to customers over phone calls and concluding contracts through home shopping, faces even more serious challenges. The share of TM among total new contracts fell from 18.9% in 2023 to 14.2% last year, while the proportion of first premiums decreased from 4.39% to 3.54% during the same period.
While the new contract market share for non-face-to-face channels like CM and TM has dropped below 20%, the face-to-face sales channel, where insurance agents meet customers to sell products, has strengthened. Notably, the sales proportion of the GA channel increased significantly, raising the dependency on GA.
The share of new contracts for the 'insurance agent' channel, which can only sell the products of a specific insurance company, fell from 27.3% in 2023 to 25.7% the following year, with the proportion of first premiums decreasing slightly from 27.5% to 27%. In contrast, the share of new contracts for GA increased to 44.3% last year from 38.7% the previous year. In particular, the proportion of GA in first premiums jumped from 50.8% in 2023 to 54.3% last year, exceeding 50% for two consecutive years, indicating that GA is selling more long-term life insurance products with high premiums.
"It is difficult for customers to complete contracts even when insurance agents meet them in person, so it is hard to imagine customers directly accessing the insurance company's website to enroll in health insurance," said an industry insider, adding that "for the time being, face-to-face sales are likely to be more active."