Life Insurance Industry Calls for "Sales Channel Innovation"... Research Service Contract Issued

In-Person Recruitment Accounts for 98.7%
As Big Tech and Fintech Enter Insurance Industry,
Need for Innovation Centered on Digital Channels Increases

[Asia Economy Reporter Ki Ha-young] The life insurance industry is conducting a research project to innovate sales channels. This is interpreted as an effort to secure competitive sales channels and establish a foundation for sustainable growth as the entry of big tech (large information and communication companies) and fintech into the insurance industry becomes more visible.

According to the industry on the 30th, the Life Insurance Association recently commissioned a research project to innovate life insurance sales channels. Following the planned bidding process, once a company is selected to carry out the project, the results are expected to be released around June after a maximum two-month research period.

Although the market environment surrounding the insurance industry is rapidly changing, the life insurance sector still relies heavily on face-to-face sales. In fact, the proportion of sales by channel based on first-year premiums last year showed that face-to-face sales accounted for 98.7%. In contrast, non-face-to-face channels such as telemarketing (TM) and cyber marketing (CM) accounted for only 1% and 0.3%, respectively. Given that life insurance companies mainly offer complex individual insurance products, it is inevitable that a high proportion of subscriptions are through agents, but channel diversification is necessary as the entire financial sector is pushing for digitalization.

The core group of face-to-face sales, insurance agents, are also aging. According to the 'Income Polarization Phenomenon of Agents and Future Tasks' report published by the Korea Insurance Research Institute last year, the average age of agent organizations in 2019 was 49.9 years for life insurance and 47.1 years for non-life insurance. These figures represent increases of 6.2 years and 3.6 years, respectively, over the past decade. The aging sales workforce has limitations in targeting younger generations, including the MZ generation (Millennials + Generation Z).

Meanwhile, as big tech companies such as Naver and Kakao make their entry into the insurance industry more visible, they are emerging as threats to the existing insurance sector. These companies are expected to expand their influence within the insurance industry by targeting the MZ generation based on platforms and technologies with versatility that existing insurance channels lack. Accordingly, there is an urgent need for channel strategies for insurance agents that differentiate from big tech and are suitable for the digital environment.

Additionally, rapid environmental changes have occurred this year, including the enforcement of the Financial Consumer Protection Act and the mandatory employment insurance for insurance agents. In particular, the 'separation of manufacturing and sales'?where headquarters handle product and service creation and subsidiary-type GA (corporate insurance agencies) handle sales?is also progressing.

A Life Insurance Association official said, "We initiated this research project to diagnose recent changes in the market, social environment, and sales channels, and to explore future-oriented channel innovation plans to provide optimal insurance services to consumers."

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