As COVID-19 Spread, Insurers Focused on 'Bancassurance'... 1.27 Trillion Won in Q1

19.6% Surge Compared to Same Period Last Year

Active Sales Instead of High-Risk Bank Products

[Asia Economy Reporter Oh Hyung-gil] Insurance companies, whose face-to-face sales were curtailed due to the COVID-19 pandemic, have made up for their performance through bank counters.

As banks actively sold savings-type insurance products instead of high-risk investment products following the overseas interest rate-linked derivative-linked funds (DLF) and Lime incidents, their needs aligned well.

According to the status of first-year premiums in the first quarter of 24 domestic life insurance companies compiled by the Life Insurance Association on the 4th, the first-year premiums (premiums paid by new customers within the first month) of insurance subscribed through bancassurance (sales of insurance at bank counters) recorded 1.2745 trillion won. This accounts for 75% of the total first-year premiums of 1.6956 trillion won. It is a 19.6% increase compared to last year's bancassurance first-year premiums of 1.0652 trillion won.

Bancassurance first-year premiums more than doubled to 710.8 billion won in February, when COVID-19 began to spread in Korea in earnest, after recording 272.7 billion won in January, and maintained a high growth rate (79.3%) in March as well.

On the other hand, insurance sales through life insurance company employees, exclusive agents, and general agencies (GA) were sluggish. First-year premiums from agents and agencies were 254.7 billion won and 117 billion won, respectively, increasing by only 4.2% and 9.1% compared to the same period last year. First-year premiums from insurance subscribed through employees declined from 50.8 billion won last year to 36.9 billion won this year.

During this period, Samsung Life Insurance achieved the most dramatic results in bancassurance. Samsung Life's first-quarter bancassurance first-year premiums surged to 525 billion won, more than double the 217.6 billion won in the same period last year.

The annualized premium equivalent (APE), which converts premiums from new contracts into an annual basis, also recorded 109 billion won for bancassurance, a 21.5% increase compared to a year ago. GA's APE increased by 16.9% to 84.3 billion won, while exclusive agents' APE slightly decreased by 1.1% to 405 billion won from 409 billion won in the same period last year.

NH Nonghyup Life Insurance, which has a relative strength in bancassurance, saw its first-year premiums decrease from 246.9 billion won last year to 222.7 billion won this year, allowing Samsung Life to catch up. ABL Life and Hanwha Life followed with first-year premiums of 162.4 billion won and 102 billion won, respectively.

Orange Life and Dongyang Life, which recorded bancassurance first-year premiums of 94.8 billion won and 88 billion won in the first quarter last year, shrank significantly to 24.4 billion won and 33.7 billion won, respectively, in the same period this year.

As insurance companies expanded bancassurance sales, banks also benefited. The bancassurance sales commissions of the four major commercial banks?Shinhan, KB Kookmin, Woori, and Hana?amounted to 64.7 billion won in the first quarter, an 8.7% increase compared to 59.5 billion won in the same period last year.

This is interpreted as a result of focusing sales efforts on the bancassurance channel as face-to-face sales by agents became difficult due to the spread of COVID-19. In particular, banks also turned their attention to bancassurance, which allows them to earn commissions, as sales of financial investment products were virtually halted due to the DLF and Lime incidents.

An industry insider said, "Bancassurance sales have increased noticeably even though no new customized products were launched," adding, "It is not easy for insurance companies to unilaterally increase bancassurance performance, so banks actively engaged in sales."

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