The Turbulent GA Market: Monopoly Intensifies Among Major Companies

[Asia Economy Reporter Changhwan Lee] An analysis has emerged that the domestic corporate insurance agency (GA) market is becoming increasingly monopolized, centered around large companies. As large insurance companies continue to establish subsidiary-type GAs, it is expected that the trend of market concentration and enlargement will persist in the GA market.

According to the Korea Insurance Research Institute on the 25th, the number of domestic GA firms increased from 3,005 in 2005 to 4,444 last year, and the number of medium to large GAs with more than 100 affiliated planners grew more than fourfold from 44 in 2005 to 178 last year. The number of large GAs with over 500 planners was 65 last year, a 4.3-fold increase compared to 15 in 2006.

GAs refer to agencies that contract with insurance companies and specialize in selling various insurance products. As the insurance industry continues the trend of separating insurance product manufacturing and sales, the GA market is also expanding.

Among them, the number of planners affiliated with medium to large GAs accounted for about 200,000 last year, representing 83.9% of the total GA sales workforce. Although many companies participate in the domestic GA market, it is analyzed as a monopolistic structure where planner personnel are concentrated in a few large companies, while other companies operate on a small scale.

As large insurance companies have begun actively establishing GA subsidiaries, the monopolization of the GA market is accelerating. Last year, Hanwha Life, Mirae Asset Life, Hyundai Marine & Fire Insurance (regional sales subsidiary), and Hana Insurance (digital sales subsidiary) entered the GA market, accelerating the separation of manufacturing and sales.

In January this year, Tongyang Life spun off its TM (telemarketing) channel to establish a sales subsidiary (My Angel Financial Services), followed by Prudential Life establishing a sales specialist company (KB Life Partners) in June, continuing the trend of insurance companies setting up GA subsidiaries.

The Korea Insurance Research Institute evaluated that subsidiary-type GAs emerged as an intermediate step to utilize both exclusive and independent channels, as large-scale departures of planners affiliated with insurance companies limited sales through exclusive organizations amid the expanding influence of the GA channel.

The influence of subsidiary-type GAs is also growing. The proportion of contracts concluded by subsidiary-type GAs in total GA insurance contracts increased from 10.1% in 2016 to 17.6% last year. Due to the sales growth of subsidiary-type GAs, the commission income of general GAs decreased from 96.0% to 85.5% during the same period, and the proportion of planners affiliated with subsidiary-type GAs rose from 5.4% to 22.1%.

The Korea Insurance Research Institute forecasted that the trend of GA enlargement and concentration will continue. It is expected that individual GAs will pursue mergers and acquisitions to achieve economies of scale in operating sales organizations.

Most GAs still have undifferentiated business models centered on sales personnel, so there is a high possibility of mergers and acquisitions among GA firms to strengthen market dominance.

Researcher Dongkyum Kim of the Korea Insurance Research Institute stated, "Insurance companies face limitations in securing marketing competitiveness against GAs or platform companies by supplying products only through their current exclusive sales channels, so they will expand the establishment of sales subsidiaries. Insurance companies need to closely monitor the differentiation of sales functions in response to changes in the GA market and carefully devise product development and sales strategies."