Burden of Employment Insurance Premiums Not Large
Expansion of Design Organizations Continues
No Expected Restructuring or Mass Layoffs
[Asia Economy Reporter Oh Hyung-gil] Starting from the 1st of next month, insurance planners will be required to enroll in employment insurance. Although the mandatory enrollment of 430,000 planners in employment insurance is just ten days away, contrary to expectations of planner restructuring or mass layoffs, the atmosphere remains calm.
According to the insurance industry on the 21st, employment insurance will be applied from July to workers in 12 special employment occupations, including insurance planners. If they meet the relevant conditions in cases of involuntary unemployment or childbirth, they will be able to receive the corresponding benefits.
If insurance premiums have been paid for at least 12 months out of the 24 months prior to the date of job change, job-seeking benefits of up to 66,000 KRW per day can be received. Even if the job change is due to income reduction, job-seeking benefits are available. Additionally, those who meet conditions such as having an insured unit period of three months or more before the childbirth date can receive 100% of their average monthly wage for 90 days during the one year prior to childbirth.
The minimum income standard for employment insurance eligibility is a monthly wage of 800,000 KRW or more; those below this are excluded from employment insurance coverage. As of the first quarter, exclusive planners affiliated with the Life Insurance Association and the General Insurance Association number approximately 90,000 and 107,000 respectively, while planners belonging to insurance agencies total about 233,000. The insurance industry estimates that about 350,000, roughly 80% of these, will be the primary subjects of application.
Although most planners must enroll in employment insurance, mass layoffs, restructuring, or large-scale movements of planners have not yet occurred. This is attributed to the relatively low cost burden.
The employment insurance premium rate is 1.4% of income, with planners and employers each bearing 0.7%. For planners affiliated with the Life Insurance Association, the average annual income is 39.84 million KRW, meaning both planners and companies pay about 270,000 KRW each.
Planners pay about 20,000 to 30,000 KRW monthly, and from the insurer’s perspective, Samsung Life Insurance, which has 24,000 affiliated planners, bears about 700 million KRW monthly in insurance premiums.
The importance of securing planners after COVID-19 is also considered a factor. As cases of self-employed individuals who closed their businesses or those temporarily unemployed due to the pandemic applying to become planners have increased, insurance companies and General Agencies (GA) are expanding their planner organizations. Amid recent movements toward the ‘separation of production and sales,’ competition to retain planner organizations is intense.
A Life Insurance company official said, "Since more expenses are sometimes spent on sales policies, this amount is manageable," adding, "There is a mood where GAs do not want to lose planners to large companies, and large companies do not want to lose planners to GAs, so contract terminations due to employment insurance are unlikely to occur."
However, it is pointed out that planners affiliated with GAs may be more affected than those with insurance companies. The GA industry has requested a three-year deferral of employment insurance application due to economic burdens. In particular, there is concern about possible restructuring of low-efficiency planners who are included in the employment insurance coverage but earn less than 1 million KRW per month.
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