[Insurance Planner Migration] ① 'Exclusive → GA'... GA Planners Near 200,000

Exclusive Life and Non-Life Insurance Agents Decrease by 10%
Mass Migration to GA Due to High Salaries and Incentives
Side Effects Include Overcompetition to Meet Performance Targets

Domestic insurance companies posted a record-high net profit of 13.3 trillion KRW last year. Insurers unanimously attribute this strong performance to their organizational restructuring and revamped sales strategies implemented years ago in preparation for the new International Financial Reporting Standard (IFRS17) introduced last year. At the forefront of insurance sales are the agents. Unlike other industries, face-to-face enrollment through agents remains absolutely essential in insurance, making their manpower a key factor in determining insurers' performance.

Mass Migration of Agents from 'Exclusive' to 'GA'

Insurance agents are broadly divided into those affiliated with insurance companies like Samsung Life Insurance and those belonging to corporate agencies (GA) operated as subsidiaries or independent entities. The industry refers to these as 'exclusive' and 'non-exclusive (GA agents).' If a business card lists a single insurer such as 'Hanwha Life' or 'Meritz Fire & Marine,' the agent is exclusive; if it shows unfamiliar company names like 'Prime Asset' or 'Inka Financial,' the agent is a GA agent.

Recently, there has been a frequent movement of exclusive agents to GA in the insurance industry.
[Image source=Getty Images]

Recently, there has been a frequent shift of exclusive agents to GA. According to statistics from the Korea Insurance Agency Association, last year there were 70 large GA corporations with over 500 agents, and the number of GA agents reached a record high of 198,517. This represents a 16.6% and 24.6% increase respectively from 60 GA corporations and 159,289 GA agents in 2019. Conversely, the number of exclusive agents in life and non-life insurers decreased by 9.9%, from 177,322 in 2019 to 159,713 as of last September. Life insurers, facing poor market conditions due to low birth rates and aging populations, saw exclusive agents decline sharply by 32.5%.

Exclusive agents handle only their affiliated insurer’s products, whereas GA agents sell products from multiple insurers. While exclusive agents have higher expertise in their products, customers who want to compare various products for better cost-effectiveness tend to prefer GA agents. Exclusive agents can also sell products from one other insurer through a cross-recruitment system, but in terms of product diversity, they inevitably lag behind GA agents.

As insurers fall behind GAs in sales power, it has become a trend to establish and operate GAs as subsidiaries. In 2021, Hanwha Life became the first major insurer to attempt separation of product manufacturing and sales by founding a GA subsidiary called Hanwha Life Financial Service. Since then, other financial holding company-affiliated insurers, mid-sized companies, and foreign insurers have joined in. Currently, 17 insurers operate subsidiary-type GAs, including 12 life insurers and 5 non-life insurers. This separation allows insurers to focus on product development while GAs provide customized products to customers, improving sales efficiency.

Fierce Talent War... Salaries and Incentives Skyrocket

Since the number of agents directly translates into sales performance, both subsidiary-type and independent GAs are fiercely competing to attract talent. They offer generous settlement bonuses equivalent to a certain level of previous salaries or wages, along with various incentives such as recruitment and retention commissions. Last year, AIA Life’s subsidiary GA caused a stir by paying a settlement bonus twice the previous salary. A GA industry insider said, "There is no fixed standard for settlement bonuses, but typically up to 50% of the previous salary is offered. Cases of 200% are extremely rare."

The value of agents has soared into the hundreds of millions of KRW. According to a '2023 Occupational Perception and Satisfaction Survey' conducted by the Life Insurance Association targeting 1,400 agents working at life insurers and subsidiary GAs, 15.7% of agents earned over 100 million KRW annually. This is more than double the 6.4% of people earning over 100 million KRW nationwide in 2022.

The surge in agent value reflects expectations that they will secure many customers. In insurance sales, customers acquired through years of face-to-face sales and errands by agents are core assets. Due to the complex nature of insurance policies and riders, customers often fully entrust enrollment and maintenance decisions to agents. Except for auto and travel insurance, it is rare for customers to research and purchase insurance independently via the internet. According to a '2024 Insurance Industry Challenges' report released by the Korea Insurance Research Institute earlier this year, the proportion of non-face-to-face insurance product enrollments via internet or mobile was only 0.6% for life insurance and 6.2% for non-life insurance in 2021, showing a stark contrast to banking (74.7%) and financial investment (83.6%) sectors.

Side Effects such as Excessive Marketing Competition

Of course, when agents move, the customers they secured do not necessarily follow. Commissions paid by insurers for existing contracts go to the GA to which the agent belonged at the time of contract signing, not to the agent themselves.

Agents who switch companies after receiving high incentives often try to prove their skills by attempting replacement contracts (switching insurance policies). They encourage customers to cancel existing contracts and enroll in new policies by promoting better coverage. This is because the new GA they joined earns revenue from these new contracts. GAs pay high salaries to recruit top agents for this reason. However, since existing contracts are often more advantageous to customers, this increases the risk of mis-selling. An agent from an independent GA revealed, "Offering high incentives means demanding high earnings, and most high earners work without weekends. Some GAs even include clauses in contracts requiring agents to return incentives if they fail to meet performance targets within a certain period."

There are also frequent cases where products recommended focus more on generating high commissions for agents rather than benefiting customers. With the introduction of IFRS17, the new contract insurance contract margin (CSM) has become important, favoring long-term and protection-type insurance over savings-type and short-term insurance. The overheated competition for short-term payment whole life insurance early this year reflects this context. An industry insider said, "Agents aggressively promote sales because insurers guarantee many incentives. Insurance products with many incentives are recommended, while others are excluded."