The Complex Feelings Behind the Introduction of the 'National Employment Insurance System': 'Insurance Companies vs Sales Agents'

On the 10th, citizens at Seoul Station are watching President Moon Jae-in's special speech on the 3rd anniversary of his inauguration. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Oh Hyung-gil] As the government and the ruling party push for the introduction of a 'universal employment insurance system' following the COVID-19 pandemic, the sentiments of insurance companies and insurance planners have become increasingly complicated.

Insurance companies are concerned that costs could rise significantly amid already deteriorating profits. To address this, they may have no choice but to downsize their planner organizations, putting planners with lower sales performance at risk of losing their jobs. High-performing planners are reportedly uneasy about the shift in their status from independent contractors to employees.

According to the insurance industry on the 11th, the mandatory employment insurance for special employment types, including insurance planners, is likely to be one of the first initiatives pursued by the 21st National Assembly. During the 20th National Assembly, amendments related to industrial accident insurance law, employment insurance law, labor union law, and laws protecting special occupations were referred to the Environment and Labor Committee but failed to pass and are now facing automatic expiration.

However, the government has clearly stated its intention to accelerate legislation mandating employment insurance in the 21st National Assembly by introducing the universal employment insurance system as a 'post-COVID' measure.

President Moon Jae-in stated in a special speech marking his third anniversary in office, "We will lay the foundation for an era of universal employment insurance where all workers receive employment insurance benefits," adding, "We will quickly eliminate blind spots in employment insurance for special employment workers, platform workers, freelancers, and artists." Furthermore, with the ruling party securing a majority in the 21st National Assembly, the likelihood of the bill's passage is increasing.

[Image source=Yonhap News]

The insurance industry is concerned that the expanded employment insurance burden on planners could disrupt the operation of planner organizations. Currently, the approximately 400,000 planners are independent sole proprietors who contract with insurance companies or General Agencies (GA) to sell products.

If employment insurance becomes mandatory for them, insurance companies or GAs will face immediate additional cost burdens. Since employment insurance premiums must be shared equally by employers and employees, costs could increase by hundreds of billions of won depending on the scale.

In particular, if employment insurance is mandated for small and medium-sized GAs with limited capital capacity, it could lead to contract terminations for low-performing planners, resulting in the unintended consequence of creating unemployed individuals through no fault of their own. As the method of insurance subscription shifts from face-to-face through planners to non-face-to-face and online channels, there is also a possibility of large-scale reductions in planner organizations.

Additionally, so-called 'top-performing' high-income planners are reportedly opposed to joining employment insurance.

Currently, planners only pay a 3.3% business income tax, but upon joining employment insurance and being recognized as employees, they may have to pay income tax up to the current highest rate of 40%. Disclosure of income and management of work hours such as clocking in and out are also cited as burdensome.

An industry insider said, "We agree that measures are needed to help planners struggling financially due to COVID-19," but added, "The mandatory employment insurance should be discussed carefully while fully considering the opinions of the related industry and workers."

This content was produced with the assistance of AI translation services.