The Boon of Insurer Competition: GA Industry's Surprising Earnings Surge

Recently, the insurance industry has seen a significant increase in reliance on General Agencies (GAs) as a sales channel

Recently, the insurance industry has seen a significant increase in reliance on General Agencies (GAs) as a sales channel, leading to impressive earnings for the GA sector. Notably, publicly traded GAs like Incar Financial Services and A+ Asset have posted record-breaking performances. This article explores how intense competition among insurers has fueled GA growth and what challenges the GA industry may face in the future.

The fierce competition among insurance companies has unexpectedly benefited the GA industry, resulting in a surge in profits. Incar Financial Services and A+ Asset, two major GAs, have reported record-breaking performances in the first half of the year. Incar Financial Services, for instance, saw its revenue increase by 61.8% year-on-year to 396.4 billion KRW, while net profit grew by 103.9% to 27.4 billion KRW. This growth can be attributed to the company's proactive recruitment of top insurance agents following its listing on KOSDAQ.

Similarly, A+ Asset reported a 48.6% year-on-year increase in revenue to 212.6 billion KRW, with net profit soaring by 140% to 12 billion KRW. This success is largely due to the fact that GAs, which offer a diverse range of insurance products, have become an effective way for insurance companies to alleviate the pressure of short-term performance. As insurers increasingly rely on GAs in the heated sales market competition, the GA industry is reaping significant benefits.

Furthermore, the introduction of the new accounting standard, IFRS 17, has intensified the focus on selling protection-type insurance policies. As insurers compete to secure Contractual Service Margins (CSM), the role of GAs, who lead these sales efforts, has become even more crucial. For example, Hanwha Life Insurance’s substantial growth in Annualized Premium Equivalent (APE) during the first half of the year was bolstered by the strong sales performance of its subsidiary GA, Hanwha Financial Services.

However, this growth also presents potential challenges. The Financial Supervisory Service recently issued a warning about the possibility of mis-selling some insurance products in the rapidly expanding GA sector. This highlights the need for the GA industry to maintain customer trust and ensure rigorous management to achieve sustainable growth.

While the competition among insurers has driven rapid growth in the GA industry, it also underscores the dual nature of opportunities and challenges faced by GAs. As the role of GAs becomes increasingly important, the industry must focus on maintaining customer trust and ensuring sustainable growth. The evolving dynamics between insurers and GAs will be an important area to watch in the future.