"Insurance Agents' Income Decreased Due to COVID-19... Need to Strengthen Competitiveness"

Source: Korea Insurance Research Institute

[Asia Economy Reporter Changhwan Lee] It has been revealed that the income of insurance planners has decreased due to the deterioration of the business environment caused by COVID-19 and the weakening of channel competitiveness.

According to the Insurance Research Institute's report titled 'Causes and Evaluation of Planners' Income Decline' on the 7th, during the two years when COVID-19 spread, the average monthly income of exclusive non-life insurance planners fell by 7.6%, and that of exclusive life insurance planners dropped by about 2%.

The average monthly income of exclusive life insurance planners was 3.23 million KRW last year, a decrease of about 130,000 KRW compared to 2019 before COVID-19. During the same period, the average monthly income of exclusive non-life insurance planners was 2.56 million KRW, down about 440,000 KRW compared to 2019.

The decrease in planners' income was analyzed to be caused by restrictions in the insurance business environment and weakening channel competitiveness.

As COVID-19 prolonged, planners faced limitations in their sales activities due to consumers' avoidance of face-to-face contact and contraction of consumer sentiment.

According to a survey by the Life Insurance Association, 70.3% of planners surveyed reported a decrease in income compared to before COVID-19.

With the diversification of sales channels such as GA (General Agency), bancassurance, and CM (Cyber Marketing), planners' sales competitiveness has also declined compared to the past.

In particular, the rapid growth of the GA channel, which has a sales method similar to exclusive planners but offers consumers the advantage of a variety of products, had a significant impact.

Source: Korea Insurance Research Institute

The decline in productivity (sales per planner) is also evident, especially among non-life insurance planners. The productivity of life insurance planners rose from 2017 to 2019 and has since stagnated, while the productivity of non-life insurance planners has been continuously declining since 2017.

The decline in planners' productivity is partly attributed to the aging of planners. As of last year, the average age of life insurance planners and non-life insurance planners was 49.1 and 47.5 years, respectively, increasing by 5.9 and 3.8 years over the past decade.

While older sales personnel have advantages in building connections with older customers, it is pointed out that they may face difficulties in sales targeting younger age groups.

Additionally, the recruitment of sales personnel without accompanying sales expansion (growth in premium income) has led to a decline in planners' productivity and income.

The number of exclusive non-life insurance planners increased from 81,331 in 2016 to 103,219 in 2021, an average annual growth of 4.9%. It is analyzed that excessive competition among sales personnel in a saturated market environment may have led to the decline in productivity.

The report emphasized the need to increase added value by concentrating resources in areas where planners can have advantages or through effective personnel management to improve planners' productivity.

Since strategies seeking short-term performance improvement through expanding sales organizations are not suitable in a low-growth sales environment, it argued that it is necessary to recruit personnel suitable for the company and support them to secure expertise.

Researcher Dongkyum Kim of the Insurance Research Institute stated, "The existence of excessive sales personnel relative to market size makes it difficult to generate adequate income, increasing the likelihood of planners' turnover or dropout."

Researcher Kim added, "It is necessary to be cautious so that the departure of planners due to income decline does not lead to weakened sales control and consumer harm," and said, "Frequent turnover of planners makes it difficult for insurance companies to maintain exclusive sales organizations, increasing dependence on external sales organizations and potentially weakening sales control."

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