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South Korea's Insurance Market: Growth and Challenges

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Commission revenues for general agencies in South Korea have surpassed 10 trillion won in the first half of the year, signaling the growing clout of these agencies in the insurance market.

The Korea GA Association reports that 73 leading general agencies, each consisting of more than 500 agents, experienced a remarkable 16.4% increase in their commission revenues compared to the previous year. The life insurance sector was a key driver of this growth, boasting a substantial 24.8% rise in commissions to 5.73 trillion won. Meanwhile, the non-life insurance segment also showed a healthy 7.5% increase, yielding 4.72 trillion won. This expansion is set against a backdrop of an agent network that expanded significantly, with the number of agents increasing by 13% to over 281,000.

However, despite rising premium volumes, the number of new policies issued has declined. New contracts dropped by 7.7% compared to last year, with total numbers amounting to 8.96 million. Notably, first-year premiums for new business surged by 17.3% to 3.62 trillion won, largely due to a remarkable 61.5% increase in life insurance premiums, which reached 1.31 trillion won. Non-life insurance saw a modest new business growth of 1.6%. Additionally, the sector improved its persistence rates, with the persistency of policies reaching 88.15% at 13 months and 75.85% at 25 months, reflecting improvements in customer retention.

Key Statistics

  • Life insurance commissions grew by 24.8% to 5.73 trillion won.
  • Non-life insurance commissions increased by 7.5% to 4.72 trillion won.
  • Agent network expanded by 13.0%, reaching 281,580 agents.
  • First-year premiums for new business rose by 17.3% to 3.62 trillion won.
  • New policy numbers declined by 7.7% to 8.96 million.
  • Persistency rate at 13 months improved to 88.15%.
  • Persistency rate at 25 months increased to 75.85%.

While the rise in commissions and the number of agents highlight a robust distribution network, the decline in new policy numbers suggests potential challenges in converting high agent presence into increased new business. Nevertheless, the reduction in incomplete sales and improvement in policy persistency rates indicate enhanced quality of sales practices and customer satisfaction. As general agencies continue to shape South Korea's insurance landscape, industry professionals should monitor these trends closely to adapt effectively to changing market dynamics.