"Stop Excessive Client Poaching by Agents"…Insurance Agency Association Accelerates Self-Regulation

Expanded to over 60 participating companies by year-end
Goal to restrain competition in agent scouting
"Large insurers still increasing agents"

The Korea Insurance Agency Association is accelerating efforts to sign a voluntary agreement with large insurance agencies (GAs) to curb excessive competition in recruiting insurance planners. This move aims to protect the competitiveness of the GA industry itself, especially as insurance companies are increasing their subsidiary-type GAs. It also reflects concerns that excessive recruitment competition could lead to incomplete sales and indiscriminate insurance switching (replacement contracts), which could harm customers.

On the 8th, the Insurance Agency Association announced that as of the previous day, it had signed the 'Voluntary Agreement for Consumer Protection and Internal Control of Insurance Agencies' with 52 GAs. Among them, 39 large GAs have more than 1,000 insurance planners affiliated. The association plans to expand the number of participating companies to around 60 by the end of the year. Since the appointment of Chairman Kim Yong-tae, a three-term lawmaker, in June, there has been a stronger push to increase participation in the agreement. Chairman Kim plans to visit and sign agreements with 3 to 4 companies weekly this month, following visits to AIG Advisor (4th), Kiwoom Asset Planner (5th), and MetLife Financial Services (6th).

The top priority of the voluntary agreement set by the association is to prevent excessive recruitment of insurance planners. This is due to the recent intensification of planner poaching as insurance companies expand their subsidiary-type GAs. Since individual sales performance directly affects results, planners typically encourage their existing customers to switch insurance products to those recommended by their new company when they move. However, such replacement contracts are illegal. The financial authorities are closely monitoring the situation because some insurance companies may promote replacement contracts to reduce high-interest or high-loss ratio products.

Previously, the association issued a 'Self-purification Resolution of the Insurance Agency Association to Prevent Excessive Recruitment' in September last year, but seeing little improvement, it began promoting this voluntary agreement. Besides preventing recruitment, the key action items include ▲prohibition of false or exaggerated advertising ▲compliance with sales guidelines during briefing sales ▲establishment of product comparison and explanation systems ▲support for compliance and internal control operation system consulting and information sharing. Operational rules have been established for this, and if violated, the association will conduct on-site investigations and inspections. If a violation is judged to be a 'serious violation,' the association will notify the supervisory authorities as a follow-up measure.

As large insurance companies continue acquiring subsidiary-type GAs, there are calls for the agreement to be firmly established as soon as possible. Hanwha Life has already acquired PeopleLife, a GA ranked sixth in the industry, earlier this year despite having subsidiary-type GAs such as Hanwha Life Financial Services and Hanwha Life Lab. This increased the total number of planners to about 25,000 and attracted 100 billion KRW in investment based on this. Samsung Life has also officially announced plans to pursue GA acquisitions or equity investments.

An industry insider said, "If this trend continues, GAs participating in the voluntary agreement may only feel a sense of crisis," adding, "It is necessary not only to encourage participation in the voluntary agreement but also to establish measures that allow GAs to feel more secure."