Sharp COVID Cold Wave Causes Dramatic Decrease in 'Cheolsae Insurance Agents'

Impact of Decline in Face-to-Face Insurance Sales
Increase in Retention Rate of Exclusive Agents
Aftermath of Severe Disciplinary Actions on Major GAs

[Asia Economy Reporter Oh Hyung-gil] Hwang Mi-hye (31, pseudonym), who has been working as a telemarketing (TM) insurance planner at a foreign life insurance company for two years, recently found herself troubled after hearing from a consulting customer that she "lacks competitiveness." While planners affiliated with corporate agencies (GA) introduce products from various insurance companies, she only sells products from her exclusive insurance company, which means fewer options for customers.

However, seeing a colleague who recently moved to a GA become unemployed due to the company’s suspension of operations made her hesitant to change jobs. Hwang said, "Earlier this year, I received recruitment offers from several GAs, but after the COVID-19 pandemic, all contact stopped," adding, "Being exclusive is more stable than GA, so I plan to postpone changing jobs a bit more."

As face-to-face insurance sales have shrunk due to COVID-19, the job-switching market for planners has also frozen. Recently, several large GAs were found guilty of unfair practices by financial authorities and received heavy penalties such as business suspension, significantly reducing the job-switching routes from insurance companies to GAs. Instead, the retention rate of exclusive insurance planners has increased.

According to the Financial Supervisory Service on the 1st, the 13-month retention rate of exclusive life insurance planners was 41.2% in the first half of this year, up 3 percentage points from the end of last year. The retention rate for non-life insurance planners also rose by 3.3 percentage points from 53.3% at the end of last year to 56.6% in the first half.

The 13-month retention rate indicates whether an insurance planner continues normal insurance solicitation activities for more than one year after newly registering exclusively with an insurance company. A higher retention rate means better management of planners.

Among life insurance companies, ABL Life recorded the highest rate at 56.6%. Prudential Life (52.8%), LINA Life (52.7%), Hanwha Life (51.1%), and Mirae Asset Life (50.6%) also showed high levels. In the non-life insurance sector, NongHyup Property & Casualty Insurance ranked first with 92.9%, followed by DB Insurance (70.6%), MG Insurance (62.5%), Heungkuk Fire & Marine Insurance (62.3%), and Hyundai Marine & Fire Insurance (61.9%).

The insurance industry explains that the high retention rate is largely due to the impact of COVID-19. As sales performance declined and income was hit, more planners are choosing to stay put rather than switch companies.

Insurance companies have recently increased support such as settlement subsidies and education to prevent planner turnover, and are expanding non-face-to-face support considering the COVID-19 situation. Hanwha Life recently established a system that allows the entire process of becoming an insurance planner to be completed via a smartphone application.

KB Insurance introduced a smartphone system that enables planners to enroll customers in insurance without meeting them in person. Shinhan Life also revamped an app that supports planners’ marketing activities.

With tightened regulations, the GA industry is showing a cautious attitude toward new hiring. The added burden of mandatory employment insurance for special employment types is increasing recruitment difficulties.

Especially with Leaders Financial Sales and Taewang Partners, once considered large GAs, effectively disbanded due to financial authority sanctions, anxiety is growing over who will be the next target. From March next year, the Financial Consumer Protection Act will be enforced, requiring payment of fines and compensation liabilities for incomplete sales.

An official from the insurance agency industry said, "Large GAs are surpassing the status of simple agencies to the extent of preparing for listing on the KOSPI recently," but expressed concern that "small and medium-sized GAs are facing difficulties surviving as their sales shrink."

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