Mirae Asset Life cut branches to boost profitability

The Mirae Asset Life head office in Seoul / Courtesy of Mirae Asset Life

By Jhoo Dong-chan

Mirae Asset Life, a life insurance unit of Mirae Asset Financial Group, is reducing the number of its branches to cut related opportunity costs including rent, the insurer said Tuesday.

In the meantime, the insurer has raised life planners' incentives to maintain, or rather strengthen, its sales network. The business approach was previously introduced by Meritz Fire & Marine Insurance, which has helped Meritz boost its market presence in a more effective way.

Mirae Asset Life said it reduced its 88 branches to 33 in March.

“The move was to cut opportunity costs while simplifying the business process to boost efficiency,” said a company official. “This will greatly save on rent expenses. All businesses and customer services are being executed more promptly under the downsizing.”

In exchange for reducing the number of branches across the country, the insurer renovated its current 33 branches to provide a more ideal business environment for life planners.

The insurer's moves resemble Meritz Fire & Marine Life's two-pronged approach under which the insurer reduced its branches, while more efficiently utilizing life planners in 2016.

Meritz Fire once had 221 branches but these were cut to 102 in 2016. It also introduced its own general agency network where planners sold only Meritz products. An insurance general agency is a sales subsidiary usually handling not only their own products but also those form other firms.

Meritz offered industry leading incentives to strengthen its sales network.

Thanks to its new business strategy, Meritz Fire became the nation's second-largest non-life insurer following Samsung Fire & Marine Insurance in terms of long-term insurance market share.

“We receive more incentives if we sell Meritz Fire insurance products. Of course, their insurance products are usually a headliner when we talk to our customers,” said a GA life planner surnamed Song.

“I understand Mirae Asset Life is the first life insurer to adopt the Meritz approach. This will lead to more opportunities for planners.”