The Corporate Insurance Agency (GA) Association is expected to deliver its concerns regarding the amendment to the Labor Union Act (yellow envelope law) to the Korea Enterprises Federation (KEF). If the yellow envelope law is implemented, formal collective bargaining rights will be granted to nearly 300,000 GA-affiliated agents, potentially increasing revenue pressure on GA companies. This comes as revenue deterioration is already a concern due to the financial authorities' commission reform plan, and the yellow envelope law could act as an additional burden.
According to the insurance industry on the 6th, the GA Association is currently engaged in internal discussions to convey its position regarding the yellow envelope law to the KEF. A GA Association official noted, "We are internally organizing issues related to the yellow envelope law and its impact on the GA industry" and explained, "We believe the yellow envelope law will be a factor in reducing GA companies' revenue, and we plan to communicate that alternatives are necessary to the KEF." The statement is expected to include proposals for deferment of the yellow envelope law's application to the GA industry.
The yellow envelope law, which is set to be introduced to the National Assembly plenary session next month, centers on broadening the definition of 'employer' in labor contracts. Under current law, 'employer' refers to the company directly entering into a labor contract with the employee. However, if the yellow envelope law passes, special employment workers will also be able to view the contracted company as the 'primary' employer. Currently, special employment workers have the right to establish unions, but there are restrictions related to bargaining rights and collective action.
GA agents are classified as special employment workers under the Industrial Safety and Health Act. After the passage of the yellow envelope law, GA agents will also be able to form unions and formally demand collective bargaining from their GA companies. This means that the GA agent unions can request improved treatment from the companies and may strike in case of stalemate.
This amendment could exert pressure on GA companies due to reduced revenue. According to the Financial Supervisory Service, as of the end of last year, the proportion of agents affiliated with GA companies (approximately 288,446 agents) within the total number of insurance agents in the country (651,256 agents) was 44.3%, which is over 100,000 more than the number of exclusive agents affiliated with insurance companies (184,468 agents).
The GA industry is concerned that the pending commission reform will add additional revenue pressure due to the yellow envelope law. Currently, financial authorities are pushing for a plan in which commissions received by agents for selling insurance products will be divided over a period of up to seven years, as receiving a large amount in a single time raises issues such as orphaned contracts (where agents only receive commissions and leave without managing the insurance). After discussions with the GA industry, the financial authorities decided to prioritize applying a four-year commission division, but the GA industry claims that the commission rate for the four-year division is lower than expected, leading to significant income reduction effects.
The GA Association has reportedly requested joint action concerning the yellow envelope law from the Life Insurance Association and the General Insurance Association of Korea. However, it is reported that the Life Insurance Association and General Insurance Association have not yet responded to the GA Association. There are predictions that if joint action falls through, it will be difficult for the GA Association to gain momentum in its efforts.
An industry official explained, "From the perspective of life insurance and general insurance companies, they do not perceive a large negative impact just because some GAs might go on strike, given the variety of sales channels, including exclusive agents and telemarketing (TM)."