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The size of GA insurance agencies in the insurance market is growing rapidly. Competition in the GA industry is that fierce. As excessive competition among GAs takes place in scouting, which is taking away design companies with good performance, a growing number of consumers are complaining of damage from incomplete sales. As the theory of liability for GAs that sell insurance products directly to consumers has emerged, the role of associations that manage GAs has also come under fire. This is reporter Doha Kim’s report.
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The size of GA, an insurance agency that sells products from multiple insurance companies simultaneously without being affiliated with a specific insurance company, is growing rapidly.
As of the first half of this year, there were about 271,000 planners affiliated with GA.
Compared to the end of last year (259,601 people), the number has increased by more than 10,000 in just half a year. There are also 18 very large GAs with over 3,000 affiliated designers.
As the GA industry’s presence in the insurance market grows, damage from incomplete sales is also increasing due to competition to scout planners.
The Financial Supervisory Service announced that over the past two years, there have been more than 3,500 contracts in five large GAs where unfair transfers, known as ‘insurance switching,’ were made.
Unfair transfer refers to an unfair contract practice in which a designer changes jobs, cancels the existing contract of a customer he was managing, and then re-signs the customer to a new company contract.
Planners sometimes receive settlement subsidies worth hundreds of millions of won in return for transferring the contracts of the clients they manage to new companies.
Due to excessive scouting competition among GAs, the damage to consumers is severe, with the number of ‘orphan contracts’ where designers in charge disappear, increasing.
However, there are currently no special regulations on the recruitment fees paid by GA to insurance planners. The GA industry has been preparing and implementing a ‘autonomous agreement’ to improve the order of recruiting planners since last year, but the response from inside and outside the industry to the autonomous agreement, which was already famously rendered null and void in 2015, is lukewarm.
While financial authorities are pointing out GA as a hotbed of insurance mis-selling, theories about the role of the GA Association have also been raised.
Some voices are criticizing GA Association President Kim Yong-tae. He was a politician with no insurance expertise and was controversial as he ran for the general election this year while holding the position of chairman.
[싱크] Jiyong Seo / Professor, Department of Business Administration, Sangmyung University
“The role of GA-related associations is important for the development of the insurance industry. “I think it would be helpful for the development of the industry if there were institutional mechanisms in place that would allow elected people to be reappointed when they make efforts to advance the industry.”
As the phenomenon of ‘separation of product design and sales’ in the insurance market intensifies, voices calling for GA to take responsibility for incomplete sales are growing. Attention is being paid to whether the GA Association will take steps to purify the ecosystem.
This is Kim Do-ha from Seoul Economic TV. /itsdoha.kim@sedaily.com
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