[Becoming an Insurance Insider] Introduction of Insurance Sales Specialist Companies... Back to the Surface?

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[Asia Economy Reporter Oh Hyung-gil] Recently, as the so-called 'separation of manufacturing and sales' of insurance products has spread in the domestic insurance industry, there is a growing view that this movement will accelerate the emergence of insurance sales specialist companies.

Sales specialist companies refer to companies that are independent of insurance companies and have their own authority and responsibility related to insurance sales. Unlike existing corporate agencies (GA) that only act as agents for concluding insurance contracts, these companies mediate the conclusion of insurance contracts.

In advanced insurance countries such as the United States, insurance is already sold through large agencies like GAs or financial product sales specialist companies rather than exclusive channels. In Korea, discussions on introducing insurance sales specialist companies have been ongoing since 2008, but they were suspended due to disagreements between insurance companies and the GA industry.

Recently, the insurance sales structure has rapidly shifted from insurance planners affiliated with insurance companies to GA-centered sales of various insurance products. However, GAs have encountered problems such as high commissions and lack of expertise. It is common for GA-affiliated planners to propose products focused on high commissions because they do not fully understand the products they sell.

The compensation liability system, where GAs or affiliated planners are responsible for consumer damages occurring during the insurance solicitation process, is inadequate. Another issue is that financial supervisory authorities have not been effectively managing and supervising them.

There is an opinion to convert GAs that meet certain requirements and systems into sales specialist companies to resolve these structural problems.

It is proposed to convert GAs with more than 10,000 members, incomplete sales rates below a certain percentage, insurance contract retention rates, and planner settlement rates into insurance sales specialist companies. Insurance sales specialist companies can negotiate reductions in business expenses, which are part of the cost of insurance companies and insurance products. At the same time, they must bear primary compensation responsibility for consumers, such as for incomplete sales.

The National Assembly Legislative Research Office pointed out in its report titled "Problems and Development Plans of Corporate Agencies Due to Changes in Insurance Sales Channel Structure" that "It is time to guide GAs into sales organizations with expertise and responsibility, and to impose strict responsibility for sales accountability and compensation for consumer damages caused by unfair sales practices during the insurance solicitation process."