By Yoon Ja-young
Staff Reporter
The life insurance industry has been led by big three players ― Samsung, Korea and Kyobo Life Insurance ― with the rest of the pack behind them.
While there is little argument regarding who are the "big three," there is fierce competition going on to snatch the title of the number four spot in the industry.
"ING Life Insurance was the fourth in terms of insurance premium income last year," said a spokesperson at the Korea Life Insurance Association (KLIA).
Having the position here, however, doesn't necessarily mean great news for the Netherlands-based global insurer.
ING is the top 4 in terms of insurance premium income, which refers to how much insurance premium the insurer collected last year. It includes not only the new sales last year but also the premiums from old policies sold years ago.
ING took 5.7 percent of the market for the fiscal year 2009 as of January, but its performance last year was poor when one looks at first month insurance premiums. These only take into consideration the insurance premiums paid for the first time and thus measures new sales.
ING took 2.5 percent of the market in terms of first month insurance premiums last year, compared with 7.7 percent in 2006.
A number of other foreign life insurers also suffered a setback in terms of first month insurance premiums. PCA, for example, had its share fall to 0.5 percent from 3.2 percent in 2007, and AIA, which operated here as AIG before, slid to 1.5 percent last year from 7.7 percent in 2007 due to troubles that hit AIG in the United States.
Shinhan Life Insurance made the top 4 in terms of first month insurance premiums last year, with Tong Yang, Mirae Asset, and Heungkuk also vying for the spot.
The surge of locals and the fall of foreign players has to do with a shift in products in the market. Foreign life insurers, which took only 1 percent of the market in 1997, pulled the stake up to 21.4 percent in 2007, thanks to variable insurances amid a bullish stock market. The global stock market collapse, however, led to the fall of variable insurances.
A Shinhan spokesman said the company was focusing on traditional non-savings, coverage insurances. "You can pull up sales in a short period by betting on variable insurances or savings-type insurances, but we didn't do that. So we suffered less damage during the financial crisis," he said.
"Other insurers had their sales force decrease amid the faltering variable insurance market. We, on the other hand, had our sales force grow, and it pulled up our sales."
Shinhan placed in the top 4th in terms of net profit as well. On top of its thorough risk management, the Shinhan spokesman cited stable sales channels as their key to success.
Unlike other bank-affiliated insurers that focus mostly on bancassurance, Shinhan has diversified its sales channels. The insurance sales through banks take up only 8 percent of the total for Shinhan. It has around 7,000 salespeople, who make 40 percent of the total sales, and depends on telemarketing for 35 percent of its sales.
Tong Yang Life Insurance, another strong candidate for the fourth place, also diversified its channels. "While the big 3 and foreign firms mostly depend on salespeople, we diversified to direct channels such as home shopping, general agency and bancassurance," said a spokesman at Tong Yang.
It also reaped success in niche markets, such as insurance products for children. "Though the birth rate is falling, the outlook for this market is positive. Parents keep children's insurance policies till the last moment though they cancel other financial products amid financial hardship," he said.
Listing on the stock market also helped Tong Yang. The listing really helped in terms of brand awareness, according to the spokesman.
Mirae Asset, which once marked notable growth amid the variable insurance boom, is seeking to increase its traditional insurance products. The Mirae Asset brand, the most successful name in securities business, is an asset for the life insurer.