Ending the "Agent Poaching" War in the GA Industry – Efforts Toward Transparency and Self-Regulation

The intense competition among General Agencies (GAs) to recruit insurance agents has created instability in the market. 

The intense competition among General Agencies (GAs) to recruit insurance agents has created instability in the market. Frequent agent movement between GAs has led to increased consumer complaints and damage. In response, the GA industry has introduced new self-regulatory measures to enhance transparency and manage its operations more effectively. This article explores the recent changes in the GA industry and their expected impact.

The market for General Agencies (GAs) has grown significantly in recent years, matching the size and influence of traditional insurance companies. This growth has fueled fierce competition among GAs to recruit insurance agents. Given that larger agent organizations translate to greater sales power, GAs have offered high commissions and settlement bonuses to attract top agents. However, this intense competition has led to frequent agent turnover, resulting in issues such as "orphan contracts" and "unfair replacement contracts," which ultimately harm consumers.

In response to these consumer protection concerns, financial authorities have initiated discussions on improving sales channels through an Insurance Reform Committee. Simultaneously, the GA industry has taken steps to self-regulate by establishing a "Standard for Settlement Bonuses." Going forward, when GAs and agents enter into contracts, they must prepare an appointment contract, commission payment regulations, and a settlement bonus payment contract.

Furthermore, GAs will monitor agents who receive settlement bonuses by tracking contract retention rates, incomplete sales rates, and complaint occurrence rates on a quarterly basis. This regulation applies to medium and large-sized GAs with more than 100 affiliated agents, aiming to control agent mobility and enhance transparency.

The changes do not stop there. Starting next month, the GA industry will disclose settlement bonus payment totals, advance payment rates, and agent retention rates on a quarterly basis via the GA Association's website. Additionally, 70 large GAs have agreed to participate in the financial sector’s "Do Not Call" system, which aims to block unwanted sales calls from financial companies.

Kim Yong-tae, Chairman of the Insurance GA Association, stated, "The biggest problem in insurance sales channels was excessive scouting competition. To eliminate this, we signed a self-regulation agreement and established standard guidelines. We expect this to serve as a crucial turning point in eradicating unfair replacement contracts."

The GA industry’s efforts to self-regulate and enhance transparency could be key to restoring consumer trust. Moving away from aggressive agent recruitment tactics, these changes signal a shift towards sustainable management and customer-centric sales strategies. We look forward to seeing how these efforts will help the GA industry play a vital role in fostering a healthier insurance market.