The launch of Samsung Financial Partners (hereafter referred to as Samsung Partners), an affiliate of Samsung Life Insurance's exclusive sales agencies, has put Samsung Life Insurance in a difficult position. Samsung Partners is a large insurance agency (GA) established last November through the merger of 71 exclusive agencies that sell only Samsung Life Insurance products. They reportedly joined forces to strengthen their negotiation power with Samsung Life.
However, recently Samsung Partners reported Samsung Life Insurance to the Fair Trade Commission and the Seoul Regional Fair Trade Office for transaction position abuse and unfair solicitation of personnel. It is reported that the issue arose because Samsung Partners is seeking to form partnerships with other life insurance companies.
Current insurance industry regulations impose a comparison and explanation requirement on large GAs with more than 500 agents. This system is designed to protect consumer choice by requiring that at least three insurance companies' products be compared and presented.
Before the transfer, all exclusive agencies had fewer than 500 employees. With this merger, the number of affiliated agents increased to over 6,000, thereby imposing the comparison and explanation requirement. Samsung Partners' stance is that they must establish sales contracts with at least two life insurance companies to comply with the comparison and explanation requirement.
Samsung Life Insurance reportedly conveyed its opposing position to Samsung Partners, noting that they would lose their exclusive agency status if they enter into contracts with other life insurance companies. Samsung Partners asserts that Samsung Life Insurance warned it would terminate the exclusive contract if it signed with another life insurance company. Samsung Life Insurance interprets that the comparison and explanation obligation does not apply to Samsung Partners.
There are concerns in the insurance industry that this conflict was anticipated. The establishment of the alliance GA of exclusive agencies has been pursued for nine years. They formed a council in 2015 and began efforts to establish the alliance GA but faced strong opposition from Samsung Life Insurance. Although the establishment of the alliance GA fell through, instead, small agencies gathered to create about 20 medium-sized agencies with fewer than 500 agents. These became the main force behind the launch of Samsung Partners.
As the launch of Samsung Partners became visible this year, Samsung Life Insurance belatedly took steps to respond. It is reported that they proposed offering more benefits for policies to those remaining exclusive agencies that do not participate in Samsung Partners. They also suggested a merger with their own GA, Samsung Life Financial Services.
With the launch of Samsung Partners, Samsung Life Insurance's influence over exclusive agencies is bound to diminish. A foundation has been created for Samsung Partners to raise their voice in negotiations over commissions and policy initiatives. Some in the insurance industry analyze that Samsung Partners' report to the Fair Trade Commission was also a predictable progression. At one point, Samsung's systematic management system was evaluated as being among the highest globally, earning it the moniker 'the managing Samsung.' Now, Samsung Life Insurance is at the mercy of the agency alliance, casting doubt on the saying 'the managing Samsung.'