With a rule set to take effect in July capping the first-year commissions that insurance planners can receive when they sign with corporate insurance agencies (GAs, or General Agencies) at 1,200% of the monthly premium, competition to recruit planners among insurers and between GAs is intensifying.
According to the Korea Insurance GA Association on the 30th, as of the end of last year, six of the top 10 GAs by revenue saw their planner retention rates fall compared with a year earlier. The retention rate refers to the share of newly registered planners who are still active after 13 months. If 100 people are hired and the retention rate is 50%, it means only 50 remain after a year.
The steepest decline over this period was at M Financial Service, dropping from 84.6% to 71.7%. Incar Financial Service fell from 80.4% to 70.3%, and KGA Asset decreased from 85.9% to 78%. Goodrich slipped from 69% to 68%. Mega edged down from 80.3% to 79.8%, and A+ Asset ticked down from 82.8% to 82.7%.
Behind this shift is the so-called "1,200% rule." The 1,200% rule limits the combined amount of settlement support payments and recruitment commissions that an insurance planner receives in the first year after switching companies so it does not exceed the annual premium of the policies the planner sells. For example, a planner who signs a contract with a monthly premium of 100,000 won would have their first-year recruitment commission capped at 1.2 million won after changing companies. The rule takes effect in July.
Planners employed by insurers have been subject to the 1,200% rule since 2020, but GAs were excluded. As a result, some planners contracted with GAs received large settlement support payments and commissions upfront, generating significant revenue. However, this led to problems such as misselling and lax policy maintenance and management. The financial authorities decided to apply the 1,200% rule to GAs as well to curb excessive commission competition and improve policy persistency.
Large GAs are waging an all-out campaign to attract planners before the regulation takes effect. Once the 1,200% rule is introduced, smaller settlement support payments will make it harder to recruit top performers. Planners, too, are hurrying to change jobs to prevent income declines. With these interests aligned, the GA industry's turnover rate appears to have risen.
Some large GAs have also faced investigations by the financial authorities over alleged excessive settlement support payments. According to the industry, the Financial Supervisory Service (FSS) conducted inspections of certain GAs, including the Busan-based "Skyblue Asset," to review insurance solicitation and internal control activities.
An insurance industry official said, "As the July rollout of the regulation approaches, competition among GAs to recruit planners is intensifying. If planners change jobs more frequently, managing existing clients could become difficult."