"Urgent Need for Future-Oriented Sales Channel Innovation"…Life Insurance Industry Orders Research Project (Comprehensive)

In-Person Recruitment Accounts for 98.7%
As Big Tech and Fintech Enter the 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. As the entry of big tech (large information and communication companies) and fintech into the insurance industry becomes more visible, this is interpreted as an effort to secure competitive sales channels and establish a foundation for sustainable growth.

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 delivered 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 insurance agents responsible for face-to-face sales 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 was 49.9 years for life insurance and 47.1 years for non-life insurance as of 2019. 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).

Big Tech's Entry into Insurance Becomes Visible... Need for Digital Channel Innovation

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

Additionally, rapid environmental changes are occurring 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 manufacturing and subsidiary-type GA (corporate insurance agencies) handle sales?is also progressing steadily.

In a recent report titled "Insurance Industry, Acceleration of Separation of Manufacturing and Sales and the Era of Consumer-Oriented Sales Channel Competitiveness," Samjong KPMG pointed out that "insurance companies need approaches to secure competitive sales channels and strengthen consumer-oriented sales channels." Key strategies to strengthen consumer-oriented sales channels include ▲ securing the inherent competitiveness of insurance products and services ▲ preparing plans to nurture professional insurance agents ▲ diversifying and strengthening competitiveness through multi-channel strategies ▲ exploring sales channel expansion strategies through M&A (mergers and acquisitions) of subsidiary-type GAs or GAs.

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 seek future-oriented channel innovation plans to provide optimal insurance services to consumers."

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