By Kim Tae-jong
NH Nonghyup Insurance has been quickly increasing its presence in the local market, changing the deep-rooted oligopoly by the so-called "big three" life insurers ― Samsung, Hanwha and Kyobo.
According to recent data, NongHyup recorded 27.37 billion won in initial premiums from new contracts signed last month on the heels of Samsung with 31.72 billion won.
It's remarkable as NongHyup outperformed Hanwha and Kyobo with big gaps in sales. They posted 17.58 and 14.19 billion won, respectively.
The result is surely meaningful to NongHyup, which has long been regarded as a game-changer in the life insurance market due to its huge potential for growth.
Upon its launch in 2012, it became the country's fourth-largest life insurance provider with around 35.3 trillion won in assets.
"Traditionally, we see a strong increase in sales in the month of March, right after we conduct massive personnel reshuffles," an official from NongHyup said. "But this year, we have seen a bigger increase, even outperforming Hanwha."
The sales came largely from bancassurance products through the insurer's strong sales networks.
As it is an affiliate of the NongHyup Financial Group, which controls the financial business operations of the National Agricultural Cooperative Federation (NongHyup), the insurer can fully leverage retail networks for its business. In fact, it has the largest number of sales channels among insurance firms.
NongHyup Life Insurance has about 6,000 bancassurance channels to sell its insurance products, including 4,500 regional unions of the National Agricultural Cooperative Federation, 1,100 branches of NongHyup Bank and five branches of NH Investment & Securities.
Thanks to support from the broad sales networks, NongHyup secured the No.1 position last year in terms of initial premiums from new contracts.
According to the Korea Life Insurance Association, NongHyup secured 2.16 trillion won in initial premium from new contracts between April and December of last year, while Samsung, Hanwha and Kyobo posted 1.98 trillion won, 1.01 trillion won and 692 billion won in the same period.
Based on the result, NongHyup's market share stood at 25.9 percent and should be included in the "big three" and mark the beginning of an era of the "big four."
But analysts say NongHyup's sales results should be closely examined, although they speak highly of its potential.
"First of all, the drastic increase in sales in March is a temporary phenomenon, which happens every year," David Rhee, an analyst at Hyundai Securities, said.
"I'm skeptical of chances that the sales will continue in a sustainable manner, because it is just an outcome of a strong sales drive ahead of an election to select new leaders in regional unions."
Although NongHyup's potential for growth is huge, it has a long way to go to catch up with major competitors as it lacks competitive product portfolios and experienced salespeople, he said.
Market insiders also believe NongHyup should reduce its dependence on the sales of savings products and focus more on selling insurance programs.
"We still don't consider NongHyup as a well-established insurance firm because it mostly sells savings products instead of insurance programs," an official from one of the big three insurance firms said.
In fact, the portion of insurance products in March only accounted for 10 percent, or 2.8 billion won, with the rest being savings products, according to NongHyup.
To compete with the major three insurers, it should come up with new strategies to take advantage of its sales networks for the sale of insurance products, he said.
"It has still a weak image as an insurance firm. So the urgent mission is to establish its identity as an insurance firm with better portfolios," he said.
NH Nonghyup Insurance has been quickly increasing its presence in the local market, changing the deep-rooted oligopoly by the so-called "big three" life insurers ― Samsung, Hanwha and Kyobo.
According to recent data, NongHyup recorded 27.37 billion won in initial premiums from new contracts signed last month on the heels of Samsung with 31.72 billion won.
It's remarkable as NongHyup outperformed Hanwha and Kyobo with big gaps in sales. They posted 17.58 and 14.19 billion won, respectively.
The result is surely meaningful to NongHyup, which has long been regarded as a game-changer in the life insurance market due to its huge potential for growth.
Upon its launch in 2012, it became the country's fourth-largest life insurance provider with around 35.3 trillion won in assets.
"Traditionally, we see a strong increase in sales in the month of March, right after we conduct massive personnel reshuffles," an official from NongHyup said. "But this year, we have seen a bigger increase, even outperforming Hanwha."
The sales came largely from bancassurance products through the insurer's strong sales networks.
As it is an affiliate of the NongHyup Financial Group, which controls the financial business operations of the National Agricultural Cooperative Federation (NongHyup), the insurer can fully leverage retail networks for its business. In fact, it has the largest number of sales channels among insurance firms.
NongHyup Life Insurance has about 6,000 bancassurance channels to sell its insurance products, including 4,500 regional unions of the National Agricultural Cooperative Federation, 1,100 branches of NongHyup Bank and five branches of NH Investment & Securities.
Thanks to support from the broad sales networks, NongHyup secured the No.1 position last year in terms of initial premiums from new contracts.
According to the Korea Life Insurance Association, NongHyup secured 2.16 trillion won in initial premium from new contracts between April and December of last year, while Samsung, Hanwha and Kyobo posted 1.98 trillion won, 1.01 trillion won and 692 billion won in the same period.
Based on the result, NongHyup's market share stood at 25.9 percent and should be included in the "big three" and mark the beginning of an era of the "big four."
But analysts say NongHyup's sales results should be closely examined, although they speak highly of its potential.
"First of all, the drastic increase in sales in March is a temporary phenomenon, which happens every year," David Rhee, an analyst at Hyundai Securities, said.
"I'm skeptical of chances that the sales will continue in a sustainable manner, because it is just an outcome of a strong sales drive ahead of an election to select new leaders in regional unions."
Although NongHyup's potential for growth is huge, it has a long way to go to catch up with major competitors as it lacks competitive product portfolios and experienced salespeople, he said.
Market insiders also believe NongHyup should reduce its dependence on the sales of savings products and focus more on selling insurance programs.
"We still don't consider NongHyup as a well-established insurance firm because it mostly sells savings products instead of insurance programs," an official from one of the big three insurance firms said.
In fact, the portion of insurance products in March only accounted for 10 percent, or 2.8 billion won, with the rest being savings products, according to NongHyup.
To compete with the major three insurers, it should come up with new strategies to take advantage of its sales networks for the sale of insurance products, he said.
"It has still a weak image as an insurance firm. So the urgent mission is to establish its identity as an insurance firm with better portfolios," he said.
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