Insurance companies face dearth of salesmen
A manager at a major insurance company surnamed Kim said some of his older employees wanted to quit because they felt they were too old to take the qualification exam to sell retirement pensions and variable insurance, which occupy a considerable chunk of sales. In Korea, these products can only be sold by those who receive certification after passing the exam.
“The economic downturn and low interest rates aren’t exactly the best combination for the insurance business,” Kim said. “Salesman after salesman are handing in their resignation.”
According to Financial Supervisory Service data released last Sunday, the number of domestic insurance sales reps continued to decrease since 2010. There were 117,311 life insurance sellers and 81,148 indemnity insurance sellers under exclusive contract last year, a decrease of 19.6 percent and 14.6 percent each from 2012 figures.
The fall is even more evident in data from the Korea Life Insurance Association (KLIA). In 1999, there were 241,948 registered insurance salespeople, but that number plummeted to 127,217 last year.
The domestic insurance market is already a red ocean, with sellers unable to attract more customers in an oversaturated market. More innovative, low-cost insurance distribution channels such as so-called bancassurance, whereby insurance is sold through banks, and sales via the internet and smartphones are also replacing traditional face-to-face methods.
Across the entire market last year, only 19.5 percent of sales were face-to-face, a heavy slide from 2001’s 60.3 percent. Insurance companies have nonetheless set up rules like firing low-performing employees who do not manage to sell services for three months or more.
Employing too many salespeople incurs excessive costs. Insurance companies on average grant sales reps some 2 million won ($1,750) as education fees on their day of appointment, with another 2 million won per month in resettlement allowance during the first year of work. New employees who adapt well to the organizational structure are given an additional 600,000 won benefit after working seven months.
Not only are there fewer salespeople in Korea, the demographics of the profession are skewing towards the older side. According to the KLIA, 34.8 percent of insurance planners last year were aged 50 and up, compared to 2005’s 14.9 percent. Salesmen aged over 60 also accounted for 5.9 percent, rising from the 2.2 percent over the same period.
“Most of the newly employed salesmen nowadays are those aged over 50, who had no other choice after retiring from their previous workplaces,” said a CEO of an insurance brokerage company. “Young people aren’t really keen on this job, and they tend to give up easily because at their age, they have less sophisticated interpersonal networks necessary for sales activity.”
An analysis by the Korea Insurance Research Institute (KIRI) showed that the aging of salesmen is a global phenomenon. Some 74 percent of insurance sellers in the United States are over the age of 50, and 41 percent are over 60. The situation is similar in Japan, where many baby boomers are retiring and younger job seekers are looking for more stable and well-paying jobs.
These trends may fundamentally change Korea’s insurance market.
“Major insurance corporations that have a large salesman organizational structure will be shaken from the core,” said Kim Seok-yeong, a researcher at KIRI. “Such exclusive contracts aren’t cost-effective, so they might need to upgrade and offer additional services like financial and health consulting.”
BY HAN AE-RAN [firstname.lastname@example.org]
More in Industry
[SHORTCUT] Is 2021 the year electric vehicles go mainstream?
Lobby groups call for leniency for Samsung's Lee
Thousands claim fraud after buying items via social media
No dial tone for 2G services on LG U+ starting in June
Ironing out an air corridor took decades