Insurance Companies Increased Agents Despite COVID-19... Employment Insurance Fees Near 58 Billion Won (Comprehensive)

Life Insurance Up 2.3%, Non-Life Insurance Up 6.7% Last Year
Employment Insurance Premiums Expected to Approach 58 Billion Won Annually

[Asia Economy Reporter Oh Hyung-gil] Last year, insurance companies significantly increased the number of exclusive agents. Starting from July, 14 types of special employment workers (SEWs), including insurance agents, will be required to enroll in employment insurance, and with the expansion of exclusive agents, the employment insurance premiums that insurance companies must pay are also expected to rise sharply. Insurance companies are concerned that the increased cost burden may lead to the dismissal of agents.

According to the Life and Non-Life Insurance Associations on the 6th, as of October last year, the number of exclusive life insurance agents was 94,056, an increase of 2,129 (2.3%) from 91,927 at the end of the previous year. During the same period, the number of exclusive non-life insurance agents also increased by 6,389 (6.7%) compared to the end of 2019 (94,995), surpassing 100,000 for the first time ever.

The reason insurance companies significantly increased exclusive agents despite the COVID-19 pandemic is interpreted as an effort to attract new customers through new agents to mitigate the impact of sluggish sales. However, concerns have been raised that the increase in agents will bring about a shock in employment insurance.

According to the "National Employment Insurance Roadmap," the government plans to change the employment insurance eligibility criteria from working hours to income. The current standard, which applies only to wage workers working "60 hours or more per month," will be changed so that anyone with a "monthly income above a certain level" will be required to enroll in employment insurance.

In particular, how much insurance premiums insurance companies will have to bear is a matter of great interest. Currently, for wage workers earning 2 million KRW per month, the employment insurance premium is 32,000 KRW (employment insurance rate 1.6%), split equally between employer and employee.

As of 2019, the average monthly income of exclusive life insurance agents was 3.36 million KRW, and for non-life insurance agents, it was 2.99 million KRW. If the wage worker insurance rate is applied to agents, life insurance agents would bear an average premium of 53,000 KRW, and non-life insurance agents 48,000 KRW. If the premium is split equally between agents and insurance companies, the premiums would be 26,000 KRW and 24,000 KRW respectively.

Applying these premiums to all exclusive agents means that life and non-life insurance companies would each bear a monthly premium burden of 2.4 billion KRW. On an annual basis, this amounts to 58 billion KRW.

The insurance planner exam is being held on the 26th at the Myeongji College sports field in Seodaemun-gu, Seoul, to prevent the spread of the novel coronavirus infection (COVID-19). Photo by Moon Ho-nam munonam@

Proliferation of Small and Medium GA... Direct Impact on Management Burden from Employment Insurance Premiums

In particular, for corporate insurance agencies (GAs) employing 230,000 agents, most are small and medium-sized except for some large GAs, raising concerns that the payment of employment insurance premiums will directly impact management burdens.

As of 2019, there were 4,477 operating GAs, with a total of 232,870 affiliated agents. According to the Korea Insurance Research Institute, the income distribution of GA-affiliated agents shows that those earning less than 500,000 KRW per month account for the largest share at 31.8%, while those earning more than 5 million KRW per month account for 14.7%.

Some argue that low-income agents should be exempt from mandatory employment insurance enrollment. The government is considering support for employment insurance premiums for low-income SEWs.

An industry insider said, "If employment insurance expands to the four major social insurances, the costs the industry must bear will increase exponentially," adding, "Currently, wage workers working less than 60 hours per month are excluded from employment insurance coverage, but if the criteria change to monthly income, it is appropriate to exclude low-income agents."

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