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Independent sellers now determining which policies fail and which succeed
May 15, 2009
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Some even sneak into corporate offices and pester the workers in the middle of the day. But now things are changing. A growing number of so-called general agencies - free agents that sell policies from several different local insurers - are gaining in popularity and now wield more influence than the policy providers themselves on Korea’s insurance market, the world’s seventh largest. These general agencies, the first of which was established in 2001, have grown rapidly over the years, with 3,668 in operation as of last year. That same year, the number of sales representatives at such agencies was more than 100,000. Eight major agencies have more than 1,000 sales agents each, enough to exercise significant leverage on local insurance companies. Indeed, Heungkuk Life Insurance has even introduced a new policy named after A+ Asset, one of the biggest independent sales agencies in the industry. Particularly eager to cater to these general agencies are small and mid-sized insurers with weak sales networks compared to their bigger industry rivals. For instance, one out of three insurance policies at Meritz Fire & Marine Insurance and Hanwha Non-Life Insurance are sold by these independent agencies. Meanwhile, the Korean branch of Allianz Life Insurance, which currently has contracts with more than 30 independent sales agencies, is planning to double that number by the end of this year. “Now such free agencies have gained so much power in relations with the insurance companies that a change in free agencies’ business directions can cause significant fluctuations in the insurers’ earnings,” said Han Seung-hee, an analyst at Woori Investment & Securities. For example, local life insurers are complaining that sales are faltering lately because many general agencies have shifted their focus from selling life insurance policies to general insurance, considered more lucrative for their agents. Indeed, of all general insurance policies sold in March, 20 percent went through general agencies, up from about 3 percent a year ago, according to the Korea Insurance Development Institute. “Now the general agencies have changed business direction, and along with the slow economy this is taking a really big toll on our sales,” said a representative at one midsize life insurance company here who declined to be named. By Han Ae-ran , Jung Ha-won [hawon@joongang.co.kr] |
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