Contrasting Banks Closing Branches
Meritz Fire & Marine Insurance Increased 53 Locations Last Year
Impact of Growing Number of Agents
[Asia Economy Reporter Oh Hyung-gil] Since the outbreak of the novel coronavirus infection (COVID-19), non-face-to-face services have become a hot topic in the financial sector, yet insurance companies have actually increased their number of branches. This contrasts with banks, which have been significantly closing loss-making branches since last year. It is interpreted that while accelerating the shift to digital-based non-face-to-face sales, insurance companies cannot give up the face-to-face sales that hold absolute influence.
According to the insurance industry on the 26th, the total number of branches operated nationwide by 15 non-life insurance companies reached 2,899 as of October last year. This is an increase of 8 branches compared to 2,891 at the end of the previous year.
The company with the most branches is Samsung Fire & Marine Insurance, with 650 branches. This is followed by DB Insurance with 429 branches, Hyundai Marine & Fire Insurance with 426 branches, and KB Insurance with 328 branches.
In particular, Meritz Fire & Marine Insurance increased its branches from 214 to 267 during the same period, a rise of 53 branches (24.7%). Carrot General Insurance, which began full-scale operations last year, is also operating 6 branches.
The reason non-life insurers are increasing their branches is due to the growing number of agents. As of October last year, the number of agents contracted with non-life insurers was 181,536, a 4.2% increase from 174,173 at the end of the previous year. During the same period, exclusive agents also increased by 6.8%, from 94,770 to 101,279, influencing the expansion of branches.
The number of branches of life insurance companies was 2,945 based on the same criteria, a decrease of 72 branches (2.3%) compared to the end of the previous year. This was due to the reduction of headquarters overseeing sales from 103 to 94. In fact, life insurance company branches increased from 924 to 966. This means that while reducing the overall organization, the sales network was expanded and reallocated.
Samsung Life Insurance had the most branches among life insurers with 716 branches. This was followed by Kyobo Life Insurance with 589 branches and Hanwha Life Insurance with 581 branches. Like non-life insurers, the number of agents in life insurance companies increased by 2.4%, from 109,322 at the end of 2019 to 112,039 in October last year.
The insurance industry has been following a trend of reducing or consolidating branches to cut costs and improve sales efficiency. Since the emergence of corporate agencies (GA) specializing in insurance sales, agent turnover has increased, making it difficult to maintain large-scale branches. The development of digital-based systems that enable the entire process from insurance subscription to claims without the help of agents is also a reflection of this trend.
However, as the third insurance market, which covers care for diseases such as cancer and heart disease or injuries, expands recently, insurance companies are again focusing on securing agents.
There is also a forecast that the number of exclusive agents of insurance companies will increase further through the sales commission reform applying the '1200% rule' this year. The 1200% rule limits the total payment rate, including first-year contract commissions and incentives, to not exceed 1200% of the monthly premium. This rule does not apply to insurance companies and their subsidiary-type GAs. The average first-year commission rate of exclusive agents in the top five non-life insurers is 1176%, which is 143 percentage points higher than the 1033% of GAs.
An industry insider said, "While affiliation is important for agents, most tend to change jobs based on commissions," adding, "Agents affiliated with GAs are increasingly likely to move to insurance companies where they can receive higher commissions."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
