Why Samsung Life Cannot Prevent the Establishment of 'Samsung Financial Partners'

The consolidation of Samsung Life’s exclusive agencies to form a mega General Agency (GA) named ‘Samsung Financial Partners’ is becoming a reality.

The consolidation of Samsung Life’s exclusive agencies to form a mega General Agency (GA) named ‘Samsung Financial Partners’ is becoming a reality. In the past, Samsung Life strongly opposed such moves and successfully blocked them. However, the situation has changed, making it increasingly difficult for Samsung Life to prevent this development. In this post, we will explore the background behind the formation of 'Samsung Financial Partners,' the shift in Samsung Life’s stance, and the broader context of the expanding GA market within the insurance industry.

The plan to establish ‘Samsung Financial Partners’ by merging Samsung Life’s exclusive agencies is creating a significant stir in the insurance industry. Six years ago, the association of Samsung Life’s exclusive agencies, known as Seongdae-hyeop, attempted to break away and form a mega GA similar to GA Korea. However, internal disagreements and strong opposition from Samsung Life led to the collapse of this effort. At the time, Samsung Life was concerned that the establishment of a unified GA would make control difficult and weaken its bargaining power, leading to its strong opposition.

However, the current situation is markedly different. Samsung Life now finds itself in a position where it is increasingly difficult to prevent the launch of 'Samsung Financial Partners.' In the past, the company could rely on various forms of support to retain its agencies, such as providing office space, administrative staff, and preferential commissions. However, these forms of support have largely disappeared, weakening Samsung Life’s control. As the GA market has rapidly expanded, the risk of falling behind in the competitive landscape has grown, making it impossible to prevent the independent movement of its exclusive agencies.

A similar scenario unfolded with Hanwha Life. Hanwha Life tried to prevent its small agencies from breaking away to form GA Korea, but it ultimately failed. GA Korea has since grown into the largest GA in South Korea, and Hanwha Life was eventually forced to partner with it. This example highlights the challenges Samsung Life faces in trying to prevent a similar outcome.

Moreover, the benefits of consolidation for smaller agencies make it challenging to stop the formation of ‘Samsung Financial Partners.’ A GA allows agencies to offer a wide range of insurance products from various companies, better meeting the diverse needs of customers. Exclusive agencies that sell only Samsung Life products are at a disadvantage in negotiating commissions and recruiting agents. Recognizing this reality, these agencies see consolidation as a necessary step for survival.

The establishment of ‘Samsung Financial Partners’ signals significant changes for Samsung Life and the GA market as a whole. With the circumstances differing from the past, Samsung Life finds itself unable to prevent the independence of its agencies. As the GA market continues to expand, both Samsung Life and its agencies must adapt to the evolving landscape of the insurance industry. It will be crucial to watch how Samsung Life and its exclusive agencies navigate these changes and the impact it will have on the broader industry.