[Exclusive] Insurance Comparison Platform 'ChaBoheom' Finalizes Commission at 3%

Big Tech Firms Also Recognize Auto Insurer PM Rates
Auto Insurance Hikes Inevitable Within Platforms

The commission rate for automobile insurance from the Big 4 major non-life insurance companies has been set at 3% (excluding VAT) on the online insurance comparison and recommendation platform launching on the 19th. However, since this rate is based on the platform (PM) rate rather than the existing direct channel (CM) rate used on their own websites, an increase in automobile insurance premiums on the platform is inevitable.

According to Asia Economy’s report on the 16th, the Big 4 major non-life insurers?Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance?finalized an agreement the previous afternoon with big tech companies Naver Financial and Kakao Pay to set the insurance comparison and recommendation platform commission at a PM rate of 3%. Including VAT, the rate is expected to be around 3.3%. A representative from a major non-life insurer explained, "Although commission contracts are usually made individually between insurers and fintech companies, since this is the initial phase of the service, the Big 4 agreed to a uniform commission rate."

Until now, major non-life insurers wanted a commission rate below 3%, while big tech companies insisted on rates in the 4% range, resulting in a tense tug-of-war. Concerns grew about whether the service could launch normally as the platform’s release date approached with less than a week remaining. Ultimately, the conflict was temporarily resolved when the Financial Supervisory Service pressured them to submit insurance product consignment contracts, including commission agreements, by the 16th.

Both the major non-life insurers and big tech companies are considered to have achieved partial success in this negotiation. The positive aspect for the insurers is that the automobile insurance commission rate for sales on the platform was recognized as the PM rate rather than the CM rate used in existing online channels. The commission rate refers to the ratio of the insurance premium to the insured amount. Insurers calculate different commission rates depending on the sales channel, such as face-to-face, CM, or telemarketing (TM). CM rates are the lowest. Prior to the platform launch, major insurers stated that since costs would increase due to commissions, they would calculate a separate PM rate. On the other hand, fintech companies, including big tech, maintained that the PM rate was absolutely unacceptable. Recognizing the PM rate would raise automobile insurance prices on the platform, potentially discouraging consumers from using it. However, big tech ultimately conceded by accepting the PM rate.

Although big tech appears to have lost the commission tug-of-war on the surface, the negotiation outcome is not entirely unfavorable for them. They managed to get the major insurers, who might have boycotted the platform’s automobile insurance participation, to join the initial service, helping to generate momentum. The major insurers hold an 85% market share in automobile insurance. If they were reluctant to participate due to commission burdens, only small and medium insurers’ automobile insurance would be exposed on the platform, likely failing to attract customers. The platform benefits as it can collect commissions that did not exist before. Considering the annual automobile insurance market size of 20 trillion KRW, a simple calculation of a 3% commission means about 600 billion KRW in commissions flow to the platform companies annually. A fintech company representative said, "Ultimately, recognizing the major insurers’ PM rate raises concerns about reduced price competitiveness of automobile insurance on the platform," adding, "Both the major insurers and big tech are indifferent to consumer benefits and are solely focused on maximizing profits, which is disappointing."