Insurance sales agencies protest big tech firm's expansion into industry

Officials from Korea's insurance sales agencies stage a protest in front of the presidential office in Yongsan District, Seoul, Monday. Yonhap

By Lee Min-hyung

Traditional insurers and insurance sales agencies are stepping up their protest against a recent decision by the financial regulator enabling big tech firms such as Naver, Kakao and Toss to start insurance comparison services via their online platforms.

Under the decision by the Financial Services Commission (FSC), the online platform operators will be able to launch new services that compare and recommend insurance products for customers.

But this decision has triggered complaints from conventional insurers that fear suffering from declining revenues as the platform giants gradually make inroads into the industry. The domestic insurance market reached a saturation point and competition is already getting tougher among existing insurers.

“When the big tech firms start such services, chances are that overall insurance prices will rise, as they are widely expected to shift part of their service operation costs to customers in the end,” an industry source said.

Insurance sales agencies also reacted strongly against the watchdog's latest decision, saying that hundreds of thousands of insurance salespeople may end up losing their jobs.

Earlier this week, officials from the Korea Insurance Agency Association staged a rally in front of a presidential office in Yongsan District, Seoul, calling on President Yoon Suk-yeol to stop online platform giants from expanding their business into the insurance sector.

“Financial authorities have not received the opinions of the interested parties and are moving to allow online platform firms to operate the insurance sales agency business on the same footing with existing ones,” the association said.

It appealed to the president that this move will intensify conflict among existing insurance sales channels and cause the mass unemployment of some 450,000 salespeople here.

But officials from the fintech industry argued that big tech firms' expansion into insurance would help customers understand diverse insurance products more easily.

“As the big tech firms have a competitive edge in introducing financial products concisely, this will help customers improve their understanding of various insurance products,” an official from the fintech industry said. “Even if concerns over the possible insurance rate hikes remain in place, their expansion into insurance will diversify the options customers can choose from.”