"Naver and Kakao Cut Off Insurance Agents' Livelihoods, Industry Conflict Peaks"

About 300 insurance planners affiliated with the Korea Insurance Agency Association and members of the insurance planners' union held a rally on August 22 near the Presidential Office in Yongsan, Seoul, to resolve to block the entry of online platform insurance agencies. (Photo by Korea Insurance Agency Association)

[Asia Economy Reporter Changhwan Lee] Conflicts between the insurance industry and giant online platforms such as Naver, Kakao, and Toss over their entry into the insurance business are reaching a peak. Insurance planners have staged protests, arguing that the entry of online platforms into the insurance business will make the already struggling insurance industry even more difficult after COVID-19.

According to the insurance industry on the 5th, members of the Korea General Agency (GA) Association, the Insurance Sales Workers' Union Solidarity, and the Emergency Countermeasures Committee to Block Online Platform Insurance Entry (ECC), who are insurance industry workers, plan to hold a "Resolution Rally to Block Online Platform Insurance Entry and Defend the Survival Rights of Insurance Salespeople" at noon in Gwanghwamun, Seoul.

The ECC announced that about 5,000 people, mainly insurance planners, will gather for this resolution rally. The ECC criticized the government for allowing online platforms to enter the insurance business without sufficient consultation with industry workers, thereby endangering the livelihoods of insurance planners.

On August 23, the Financial Services Commission allowed online platforms such as Naver and Kakao to enter the insurance comparison recommendation service business at the 2nd meeting of the Financial Regulation Innovation Council. As part of regulatory innovation, instead of direct sales of insurance products, the introduction of comparison recommendation services utilizing platform characteristics was permitted for the time being.

Accordingly, online platform companies are preparing to launch insurance comparison services within the year. However, insurance products with complex structures or many high-value contracts, such as whole life insurance, variable insurance, and foreign currency insurance, which have a high risk of incomplete sales, are excluded from the comparison targets.

The insurance agency industry and frontline insurance planners believe that if online platforms expand from insurance comparison services to direct insurance sales, they will encroach on the territory of existing operators and gradually dominate the market.

Jang Nam-hoon, head of the GA Association, emphasized, "If big tech companies enter the insurance market, rapid market encroachment is expected to lead to monopolies and unfair competition," adding, "This will threaten the survival of small-scale insurance industry workers."

As the controversy continues, the Financial Services Commission stated that it has no plans to allow additional services beyond the insurance product comparison recommendation service by online platforms. A Financial Services Commission official said, "As part of regulatory innovation, we have introduced a pilot insurance product comparison recommendation service on financial platforms," adding, "We are aware of the industry's concerns and currently have no plans to permit further business expansion."

During preparations to launch insurance comparison services, online platforms are also showing signs of commission conflicts with existing large insurance companies.

Insurance companies are negotiating commission rate settings related to providing products to online platform services. Online platforms are demanding the highest possible commissions, while insurance companies are reportedly opposing the high commission rates.

An official from an insurance company said, "The entry of online platforms into the insurance market inevitably has a significant impact on the entire insurance industry," adding, "The greater their influence, the more likely conflicts with the existing insurance industry will continue."

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