Insurance agents protest in front of the presidential office in Yongsan, central Seoul on Monday. (Yonhap)
South Korean technology firms are gearing up to launch new services where users can compare different insurance products on their platforms, but the move has been met with strong resistance from traditional agents, sources said Wednesday.
Financial authorities earlier this week approved local big tech firms such as Naver and Kakao to launch test-runs of their new “insurance agent” services starting from as early as October, according to the policymaking Financial Services Commission. The services will be officially launched after the authorities reviewed the test-runs and related documents, the FSC added.
The authorities’ latest decision is part of efforts to lower the regulatory barriers between the industrial and financial sectors for economic growth. It is expected to give more clout to big tech firms eyeing entry to the insurance industry. Among them is Kakao Pay Insurance — owned 60 percent by Kakao Corp. and 40 percent by the tech giant’s payment arm Kakao Pay — scheduled to be launched as an online insurer by the end of the year.
Besides comparing insurance products, customers will be allowed to compare savings accounts and deposits provided by different banks on mobile apps and online platforms operated by major tech firms.
But the apps and platforms will be banned from recommending users of relatively high-risk products such as whole life insurance. They will also be allowed to only recommend the products and not sell them.
Meanwhile, the move has been met with strong resistance from traditional insurance agents claiming it will deal a heavy blow to local general agents, who partner with insurance carriers to market and distribute their products.
Some 300 insurance agents gathered in front of President Yoon Suk-yeol’s office in Yongsan, central Seoul, on Monday to protest the government’s support of tech entering the new business.
“The FSC has refused to discuss with us the matter and has failed to give us feedback after it received only a single round of opinions from general agents,” a spokesperson for the nation’s Insurance Agency Association said in a statement. The IAA is a nonprofit organization representing insurance agents here.
“The platforms will easily monopolize the market through their big capital and databases of millions of users,” the spokesperson added.
Kakao is among the firms most actively seeking to enter the insurance industry. After obtaining a license to operate an insurer from the FSC in April, Kakao Pay said it plans to funnel 60 billion won ($46.8 million) into launching Kakao Pay Insurance. Kakao seeks to finance an additional 40 billion won into the project.
Kakao Pay Insurance will focus on travel, cellphone and pet insurance first, according to Kakao Pay. Onlookers expect the firm to expand its portfolio to medical and car insurance in the long term.
The new insurer is projected to see fast growth driven by its connection with KakaoTalk and Kakao Pay’s monthly average users of 50 million and 38 million, respectively.
By Jung Min-kyung ([email protected])