Bancassurance Booms Again This Year... Fierce Race for Market Dominance Heats Up

Life Insurers Show Strong Growth in Q1
Variable and Pension Insurance Gain Popularity
Banks Also See Increased Fees

[Asia Economy Reporter Oh Hyung-gil] Last year, life insurance companies that benefited indirectly from bancassurance insurance sold through banks amid the private equity fund scandal are forecasting high growth again this year. Recently, pension insurance, which is highly useful for asset management from tax benefits to retirement security, has been gaining attention.

The sales practices, which secretly flourished with incomplete sales such as bundling insurance products with loans or selling protection-type products like savings, have also shown significant improvement.

According to the insurance industry on the 20th, Samsung Life Insurance's bancassurance premium income in the first quarter of this year was 730 billion KRW, a 24% increase compared to the same period last year. In particular, the proportion of survival insurance bancassurance premium income, such as health and accident insurance, among all products rose to 6.0%, about twice that of the same period last year.

A Samsung Life Insurance official explained, "Savings-type insurance such as pensions has driven up bancassurance sales, and new pension insurance contracts in the first quarter expanded mainly through the bancassurance channel, growing by 63.3%."

During the same period, Mirae Asset Life Insurance's bancassurance premium income also exceeded 1 trillion KRW. This is a remarkable achievement compared to 380 billion KRW in the first quarter of last year. In particular, variable insurance centered on the 'MVP Fund' led sales in the bancassurance market.

During this period, Dongyang Life Insurance also collected 590 billion KRW in bancassurance premium income, growing 74% compared to the same period last year, while NH Nonghyup Life Insurance and Kyobo Life Insurance also recorded slight increases compared to last year.

As bancassurance sales increase, banks' commission income is also growing. The commission income from bancassurance earned by the four major banks?KB Kookmin, Woori, Hana, and Shinhan?in the first quarter of this year was 67.8 billion KRW, a 7.3% increase compared to the same period last year.

Following last year's private equity fund scandal, banks have turned their attention from funds to insurance, and the needs of consumers seeking alternative products to deposits and savings in a low-interest-rate environment have combined to sustain the bancassurance boom. Last year, the initial insurance premiums for life insurers' bancassurance reached 6.1947 trillion KRW, a sharp increase of 1.8511 trillion KRW (42.6%) compared to the previous year.

The insurance industry expects this trend to continue for the time being. Recently, pension insurance has been receiving much attention in the bancassurance market. It is evaluated as suitable for bank customers who are highly interested in stability because of its functions that can be used for asset management such as tax benefits and gifts rather than direct profits.

Pension insurance does not require a 15.4% income tax when receiving pensions after paying insurance premiums, and interest income generated during the premium payment period is also tax-exempt. Pension savings insurance offers annual tax deductions on premiums paid during the payment period. Financial holding company-affiliated small and medium-sized life insurers such as KB Life and Hana Life are expanding sales of pension insurance as a niche market.

Recently, exclusive products that can be subscribed to non-face-to-face through banks' mobile applications without visiting bank branches have also appeared. Last month, Hana General Insurance launched the mobile bancassurance product "Hana Fully Covered Cancer Insurance" through Hana Bank's OneQ app.

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