Only CM Channels Grew Due to COVID-19... Insurance Sales Contracted Last Year (Comprehensive)

Korea Credit Information Services Develops Insurance Sales Activity Index
Insurance Sales Contracted Last Year
Only CM Channel Activated

[Asia Economy Reporter Ki Ha-young] Last year, amid the overall contraction of insurance sales activities due to the impact of COVID-19, only the Cyber Marketing (CM) channel was found to have been activated. This is interpreted as a result of insurance companies promoting non-face-to-face sales after it became difficult to attract new contracts through face-to-face sales channels alone following COVID-19.

On the 9th, the Korea Credit Information Services analyzed the trend of the 'Insurance Sales Activity Index' over two years around the start of the COVID-19 outbreak (January 2019 to December 2020), revealing that the CM channel's insurance sales activity index rose from an average of 123 points in 2019 to 132 points in 2020.

The Insurance Sales Activity Index is an indicator developed using insurance contract information focused on by the Korea Credit Information Services. It is calculated based on the monthly first premium of protection-type individual insurance products, excluding savings-type products. It shows whether insurance sales in the current month are more active or contracted compared to the previous year, and it covers sales activities not only for life and non-life insurance but also for mutual aid (including post office insurance).

Channels other than CM?such as agents, agencies, bancassurance, and telemarketing (TM)?all saw their average values decline last year compared to the previous year. During the same period, the agent channel dropped from 109 points to 100 points, and agencies decreased from 112 points to 99 points. Bancassurance and TM channels also recorded 95 points last year, down from the previous year. However, during the survey period, the monthly first premiums of new contracts for protection-type individual insurance concentrated by the Korea Credit Information Services by channel were in the order of agents (49.2%), agencies (34.4%), TM (8.7%), bancassurance (4.2%), and CM (0.3%).

Impact of COVID-19... Insurance Sales Contracted Compared to Previous Year

Last year, insurance sales showed lower activity compared to the previous year due to the impact of COVID-19. Comparing the average values of the Insurance Sales Activity Index for 2019 and 2020, 2019 recorded 110 points, while last year recorded 99 points.

Life and non-life insurance saw a brief increase in sales activity in March 2019 and March last year due to marketing for discontinued products following product revisions in April and the effect of new product launches. However, from April last year, activity somewhat contracted. In particular, in April last year, the insurance sales activity index hit its lowest point with life insurance at 85 points and non-life insurance at 90 points. This is analyzed as a combined effect of the base effect from high new contract signings in March and the contraction of insurance sales activity due to COVID-19.

Looking more specifically, life insurance saw high growth in disease (health), accident, and dementia insurance in March 2019, and a strong increase in whole life insurance in March last year. However, from April last year, periods below 100 points appeared frequently. Non-life insurance showed noticeable increases in disease (health), accident, and child insurance sales in both March 2019 and March last year. Like life insurance, after hitting the lowest point in April last year, periods below 100 points appeared frequently during the second half of the year, but it rebounded to 111 points in December last year.

Mutual aid, unlike life and non-life insurance, saw active insurance sales from March to May 2019 and June to July last year. Disease (health) and accident insurance showed high sales growth in April 2019, and whole life insurance showed high sales growth in June last year. Except for these periods, it remained below 100 points.

Hong Sung-won, a researcher at Korea Credit Information Services, said, "The Insurance Sales Activity Index reflects factors affecting insurance sales activities such as economic slowdown and insurance sales strategies due to COVID-19," adding, "It can be used as an indicator to understand sales activities in the protection-type individual insurance market from various perspectives such as by insurance sector and channel."

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