Life Insurance Companies' Separation Movement Becomes Visible... Major Shift in 설계사 Organization (Comprehensive)

Hanwha Life, First Among Top 3 Life Insurers
to Launch Subsidiary-type GA by April Next Year
Mirae Asset Life and Others Accelerate 'Separation of Sales and Underwriting'

[Asia Economy Reporter Ki Ha-young] The life insurance industry is seeing a visible movement toward separating exclusive agent organizations, known as 'separation of manufacturing and sales (제판분리)'. Following Mirae Asset Life Insurance, Hanwha Life Insurance, one of the major life insurers, will separate its exclusive sales channel starting next year. Since the separation of manufacturing and sales has already accelerated in advanced insurance markets such as the United States and Europe, it is evaluated that a major shift in agent organizations has begun domestically as well.

Hanwha Life to Spin Off Agent Organization in April Next Year

Hanwha Life announced on the 18th that it resolved to establish a sales-specialized company through an extraordinary board meeting. The newly established sales-specialized company will be named 'Hanwha Life Financial Services (tentative)' and will be set up as a 100% subsidiary of Hanwha Life. The establishment method involves a physical division spin-off of Hanwha Life's exclusive sales channel. The plan is to hold a shareholders' meeting in March next year and launch the company on April 1.

Once Hanwha Life Financial Services is established, it will become a mega sales-specialized company with about 540 sales offices, approximately 1,400 employees, and 20,000 financial planners (FPs). Considering that the current industry leader holds about 15,000 agents, this move will instantly make it the number one in the industry. It is also unrivaled in terms of capital size. The total capital of the newly established sales-specialized company will be 650 billion KRW.

Hanwha Life plans to increase corporate value and lay the foundation for sustainable growth by stabilizing profits through economies of scale with the establishment of the new sales-specialized company. To enhance mutual synergy between the headquarters and the sales-specialized company, each will strengthen their respective expertise. The headquarters will focus on supporting tasks such as product development combining various benefits and services, insurance underwriting, examination, claims payment, asset management, and responding to digital environmental changes through technology development. The new sales-specialized company will concentrate on sales capabilities with a focus on expanding market dominance.

A Hanwha Life official said, "We plan to develop into a global number one sales-specialized company with sales exceeding 1 trillion KRW in the future," adding, "Through strengthening sales capabilities and digital financial platform services, we will provide customers with more choices and grow into the industry's top life insurer and sales-specialized company, respectively."

[Image source=Yonhap News]

Cost Reduction and Profit Maximization... Separation of Manufacturing and Sales Expanding in Developed Countries

On the 1st of this month, Mirae Asset Life Insurance announced its plan for separation of manufacturing and sales. Mirae Asset Life plans to move about 3,300 exclusive agents to its subsidiary-type GA, Mirae Asset Financial Services, aiming for a final reorganization in March next year. Ham Anduk, Vice Chairman of Mirae Asset Life, will lead Mirae Asset Financial Services to develop it into a comprehensive financial product sales company.

The separation of manufacturing and sales is a growing trend mainly in the United States and Europe, where insurance markets are more advanced than in Korea. This separation reduces costs such as labor expenses and enhances sales synergy. Overseas, as the market matures, the share of GAs and Independent Financial Advisors (IFAs) is increasing, and thus GA-centered separation of manufacturing and sales is expected to become full-fledged. Last year, the share of independent channels reached 53% in the U.S. and 71% in the U.K.

From next year, changes in sales organizations are expected to accelerate due to the mandatory employment insurance enrollment for special employment workers such as insurance agents and the 1200% cap on insurance sales commissions. When insurance manufacturing and sales are separated, insurers do not need to maintain sales organizations or agent personnel, thereby reducing these cost burdens.

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