This Year, 1,800 People Have Left... Insurance Companies Face 'Workforce Exodus'

Increase in Digital Non-Face-to-Face Work
Acceleration of Organizational Restructuring and Voluntary Retirement

[Asia Economy Reporter Oh Hyung-gil] In the insurance industry, once called the "cognitive industry" because it was made up only of people and paper, people are leaving. As digital and non-face-to-face interactions spread, insurance companies are accelerating workforce reductions through restructuring, and insurance agents working in sales are increasingly quitting or changing jobs due to the impact of COVID-19.

According to the insurance industry on the 8th, the number of employees has significantly decreased this year due to organizational restructuring and voluntary retirement promoted by insurance companies. As of September, the number of employees at life insurance companies was 23,852, which is 1,489 fewer than at the end of last year. The decrease rate reached 5.8%.

The number of employees at life insurance companies had steadily remained at around 25,000 since 2017 but sharply declined this year.

During the same period, the number of employees at non-life insurance companies also decreased by 329 (0.9%) compared to the end of last year, totaling 33,112. Although the number had increased to 34,000 in 2018 and 2019, it turned to a decline after the COVID-19 outbreak.

Concerns about sluggish insurance market conditions and growth stagnation have led to a more significant reduction in the number of employees at life insurance companies. This is also interpreted as reflecting the impact of the 'separation of manufacturing and sales' to foster sales expertise by making sales companies independent. Mirae Asset Life and Hanwha Life launched subsidiary-type corporate agencies (GA) in March and April, respectively.

In addition, insurance companies are conducting high-cost personnel reductions to resolve personnel stagnation and reduce costs. Mirae Asset Life implemented voluntary retirement in March for employees aged 50 and over, and office workers aged 45 and over, marking the first such move in three years.

In June, KB Non-Life Insurance offered an unprecedented severance package of 36 months' special retirement pay and accepted retirement applications from employees in their 40s or with more than 20 years of service, reducing its workforce by 100.

Restructuring continues toward the end of the year. Shinhan Life, which was launched in July through a merger, agreed with labor to implement a temporary voluntary retirement program this year. The target includes about 1,000 employees whose combined age and years of service total 60 or more, with support of up to 37 months' base salary and special support funds (startup support, children's tuition, health checkup support).

Kyobo Life is also launching a voluntary retirement program targeting employees with more than 15 years of service. Under conditions of providing additional pay on top of the existing three months' base salary, this year it plans to expand regular special retirement as part of resolving personnel stagnation.

[Image source=Yonhap News]

Increase in Voluntary Resignations and Job Changes Among Agents

As face-to-face sales become difficult, insurance agents are leaving insurance companies shortly after starting sales activities. According to the Financial Supervisory Service, the average 13-month registration retention rate of agents at 20 life insurance companies in the first half of the year was 41.5%. The 13-month retention rate indicates the proportion of agents who have been actively selling for more than one year.

DGB Life had the lowest 13-month agent registration retention rate at 7.1%, followed by KB Life (15.4%), Orange Life (21.8%), MetLife (25.4%), NongHyup Life (26.0%), and AIA Life (27.5%), where a significant number of agents left before reaching 13 months.

The average 13-month registration retention rate for agents at 12 non-life insurance companies was 57.6%. Hana Non-Life Insurance had the lowest rate at 41.5%, with Meritz Fire & Marine Insurance (46.3%) and Lotte Non-Life Insurance (48.2%) also remaining in the 40% range.