Major property and casualty insurance companies are focusing on recruiting exclusive agents to expand long-term insurance sales (with a subscription period of over 3 years). This is interpreted as a strategy to offset the growing losses incurred in auto insurance and secure revenue. Exclusive agents have the advantage of higher understanding and expertise regarding the products of a specific insurance company compared to agents belonging to insurance agencies (GA).
According to the insurance industry on the 14th, the number of exclusive agents for 13 major property and casualty insurers, including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and DB Insurance, reached 126,586 as of the first quarter of this year, an increase of 19.8% compared to the same period last year. The company that saw the biggest increase in agents compared to last year was Hanwha General Insurance (a 50.6% increase). This was followed by Meritz Fire & Marine Insurance (a 41.6% increase) and Lotte Insurance (a 23.3% increase).
In the first quarter of this year, the proportion of long-term insurance in the total original insurance premiums (26.365 trillion won) of 13 property and casualty insurance companies was 68%, an increase of 1.3 percentage points compared to last year. During the same period, the second largest segment, auto insurance, represented 19%, a decrease of 1.5 percentage points from the previous year.
The decrease in the proportion of original insurance premiums for auto insurance is due to pressure from financial authorities, which has led property and casualty insurers to consistently lower insurance premiums. Auto insurance is a type of mandatory insurance that anyone who owns a car must enroll in. Therefore, the pressure from authorities to reduce premiums, aiming for a win-win financial environment, has continued. Insurers have been gradually reducing auto insurance premiums by about 1-3% since 2022, and this year, an average reduction rate of 0.8% is expected.
From January to May of this year, the cumulative loss ratio for auto insurance from the four major companies, Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance, was 82.8% (based on a simple average of the four companies), an increase of 3.2 percentage points compared to the same period last year. The insurance industry considers a loss ratio of 80% as the break-even point for auto insurance, meaning that exceeding this threshold will lead to unavoidable losses. For property and casualty insurers, the more auto insurance subscribers increase, the larger the losses become.
Since it is not possible to reduce the number of subscribers to auto insurance, which is a mandatory insurance from the perspective of insurers, it is essential to increase long-term insurance sales to preserve revenue. While auto insurance is primarily sold through online channels, the structure of long-term insurance products, such as terms and conditions, is complex and usually requires face-to-face enrollment. To increase long-term insurance sales, the number of exclusive agents capable of providing face-to-face consultations must inevitably increase. Unlike agents from GA, exclusive agents sell only the products of one company, making their understanding of their company's products even higher.
Property and casualty insurers are making every effort to expand the recruitment of exclusive agents. Lotte Insurance has been operating a program since last year that allows its appointed agents to also work as Lotte Card recruiters. Since 2023, it has launched a recruitment platform for insurance agents called 'Wonder.' Meritz Fire & Marine Insurance has also launched a platform called 'Meritz Partners' that allows agents to freely conduct business in locations of their choice. Hanwha General Insurance has been operating an application that allows recruitment and training of insurance agents remotely since 2020.
An insurance industry official noted, “Since auto insurance does not provide a direct structure for generating revenue, property and casualty insurers are focusing on expanding long-term insurance sales,” adding, “It is difficult to expand sales without exclusive agents, so we are concentrating on recruitment.”