Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Prudential Life deepening internal crack amid downsizing
Prudential Life Insurance Company of Korea headquarters in Seoul / Courtesy of Prudential Life Insurance Company of Korea
By Lee Min-hyung
By Lee Min-hyung
Prudential Life Insurance Company of Korea is taking an aggressive step to cut fixed costs by receiving its first-ever voluntary retirement applications, a move seen as part of its preparation for the upcoming integration with KB Life Insurance.
The step, however, is expected to raise a sense of uncertainty among the insurer's quality life planner employees, as this is the first time that the company took the measure in three decades since it tapped into the Korean market in 1990.
Prudential Life said the decision was inevitable amid the dismal industry outlook stemming from the prolonged low interest rate and dwindling economic growth. The insurer will receive applications for voluntary retirement from employees over 46 years of age or who have worked for the company for more than two decades.
But the decision is unnerving its employees, as the move is unprecedented and the company awaits a planned integration with the KB affiliate within the next couple of years.
“Receiving the voluntary retirement applications is unavoidable, as the market conditions get worse,” an official from Prudential Life said. “Other insurers are also taking similar steps due to weak outlook for a near-term rebound in the industry.”
A group of life planners of Prudential Life held a protest in front of the headquarters of the company in Seoul throughout last week, expressing discomfort over the insurer's seemingly arbitrary organizational overhaul centering on downsizing the firm's office branches. The insurer recently cut the number of its sales offices down to 63 from 76 in the name of enhancing management efficiency.
The planner consultative body has called on Prudential Life Company of Korea CEO Min Ki-sik to enhance communication with employees before making such decisions.
“The Prudential leader has visited sales offices of the company and met with life planners there from time to time since taking office in August,” the official said. “Only a few planners are raising the complaints.”
But it remains to be seen whether Prudential Life will be able to achieve solid performance in a stable manner, as uncertainties remain in place over the fate of its life planners amid a series of the firm's recent measures to cut fixed costs.
The dispute between the top management and the life planners is expected to intensify when the insurer is integrated with KB Life Insurance.
Also of note is whether KB Financial Group will be able to fulfill its earlier pledge to keep Prudential Life's brand identity alive even after the two insurers are merged.
“Outlook for the insurance industry remains pessimistic due to the years-long structural slowdown,” an insurance industry official said. “It will be tougher and tougher for any insurers to keep operating their businesses without making big changes.”