"Nationwide Employment Insurance System Promotion"... Complex Intentions of 'Insurance Companies vs Designers' (Comprehensive)

'Profit Decline' Burdens Insurance Companies with Costs
High-Income Planners Also Oppose Mandatory Employment Insurance

Planning Organizations Shrink in the Non-Face-to-Face Era
Low-Income Planners' Jobs Threatened

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 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 complex.

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 expressing concerns about the burden of changing 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 becoming increasingly likely to be prioritized in the 21st National Assembly. In 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 National Assembly’s 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 proposing 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 employed persons 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 expansion of employment insurance obligations for planners will disrupt the operation of planner organizations. Currently, the approximately 400,000 planners are independent sole proprietors who contract with insurance companies or General Agencies (GAs) to sell products.

If employment insurance is mandated for them, insurance companies or GAs will face immediate additional cost burdens. Since employment insurance premiums must be shared equally between 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 the 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 factors.

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

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