Urgent Need for Generational Change in Sales Organizations: "Change to Survive"
Operational Burdens Including Mandatory Employment Insurance for Special Employment Types
[Asia Economy Reporter Oh Hyung-gil] The insurance industry is engulfed in a wave of restructuring alongside intense organizational reforms. As insurance companies embark on large-scale sales organization restructuring targeting next year, workforce reductions are expected to be inevitable.
With the government's push to mandate employment insurance enrollment for special employment types and the 1200% cap on recruitment commissions, regulations related to insurance agents are tightening, leading to expectations that restructuring of low-performing agents will intensify starting next year.
According to the insurance industry on the 30th, Samsung Life Insurance is considering reviving the exclusive insurance agent sales headquarters division, which was abolished in last year's year-end personnel reshuffle. Although the sales organization was reorganized around regional units, the results fell short of expectations, prompting the need for a control tower.
Hanwha Life Insurance is pursuing a plan to separate its sales organization and transfer it to a sales subsidiary. Mirae Asset Life Insurance is also discussing plans to move exclusive agents to its subsidiary insurance agency (GA). In the non-life insurance sector, Hyundai Marine & Fire Insurance has entered discussions to establish a subsidiary GA.
While the aim is to reduce fixed costs by slimming down through separating sales organizations, conflicts between labor and management appear inevitable. Samsung Fire & Marine Insurance is currently experiencing labor-management conflicts over the job category conversion of indefinite-term contract workers.
An executive from a life insurance company expressed concern, saying, "Most insurance companies are seriously considering restructuring their existing sales organizations. The sense of crisis that it is no longer possible to survive using the same methods has deepened."
◆ Insurance 'Separation of Manufacturing and Sales' Surfaces... Agent Restructuring Foreseen = Insurance companies are restructuring by converting exclusive sales organizations into subsidiary corporate agencies (GA).
This is interpreted as a cost-saving measure and a step toward the 'separation of manufacturing and sales' in insurance. With changes in sales organizations coinciding with the mandatory employment insurance enrollment for special employment types, large-scale restructuring targeting low-profit and low-efficiency insurance agents is expected.
So far, insurance companies that have introduced subsidiary GAs include Samsung Life Insurance (Samsung Life Financial Services), Samsung Fire & Marine Insurance (Samsung Fire Financial Services), Hanwha Life Insurance (Hanwha Life, Hanwha Financial Asset), Shinhan Life Insurance (Shinhan Financial Plus), Mirae Asset Life Insurance (Mirae Asset Financial Services), DB Insurance (DB MnS, DB Financial Services), MetLife Life Insurance (MetLife Financial Services), ABL Life Insurance (ABA Financial Services), and LINA Life Insurance (LINA Life Financial Services). When insurance manufacturing and sales are separated, insurance companies no longer need to maintain sales organizations or agent personnel, nor directly enter into agency contracts with insurance agents.
Previously, the Financial Services Commission proposed the introduction of financial product sales specialists in 2008 and submitted a bill to amend the Insurance Business Act, but it was scrapped. The proposal aimed to recognize GAs as financial companies, acknowledging their sales expertise while imposing corresponding responsibilities. The amendment was abandoned due to concerns over mass restructuring of insurance company-affiliated agents.
However, the mandatory employment insurance enrollment for special employment types, including insurance agents, continues to increase the burden of large-scale workforce management. The government has submitted a bill to the National Assembly to automatically apply employment insurance to special employment types, aiming for passage within the year. The insurance industry demands the introduction of voluntary or optional enrollment methods, reflecting the fact that voluntary turnover accounts for 90% of this workforce.
Nonetheless, if mandatory enrollment is implemented with the plan that agents and employers each bear half of the insurance premiums, the market fears that job losses among low-performing agents will be unavoidable. Furthermore, confusion may deepen as regular employees such as branch managers and general affairs staff who manage agents may also face conversion to commissioned positions.
The aging workforce structure in insurance companies is also problematic. Hanwha Life Insurance has an average employee tenure of 17.9 years among its approximately 4,000 employees, with projections that one-fifth of all employees will be subject to wage peak systems within the next five years. Samsung Life Insurance's average tenure is 15.4 years, comparable to or higher than that of banks (Kookmin Bank 16 years, Shinhan Bank 15 years).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
