As the first commission payment date approaches under the '1200% rule' for insurance agents affiliated with corporate insurance agencies (GAs), many GAs have yet to finalize specific payment criteria. GAs are adjusting their payment plans while monitoring competitors to prevent agent departures.
According to the insurance industry on August 18, many GAs have not yet communicated the detailed commission criteria reflecting the 1200% rule to their agents.
Typically, GA agents receive commission payments based on the previous month's contract performance around the 25th of the following month, with payments made by the 27th. Some GAs have developed payment plans that incorporate the 1200% rule, but these plans remain in draft form or are still undergoing last-minute adjustments.
The 1200% rule limits the commission paid to agents in the first year of an insurance contract to a maximum of 12 times the monthly premium. For example, if a customer pays a monthly premium of 100,000 won, the maximum commission that can be paid in the first year is 1.2 million won.
The hesitation among GAs in finalizing payment criteria stems from the need to secure agents and compete in product sales. The level and timing of commission payments can directly influence agent turnover and the company's sales performance.
One GA agent stated, "For agents, products that offer higher commissions payable next month are more advantageous than those that pay out a year later. If the products offer similar coverage, the conditions for commission payments can affect sales, leading companies to closely observe competitors' payment plans."
Industry discussions also include proposals to reduce the share of commissions for branch managers and other mid-level managers. Lowering commissions for frontline agents significantly could lead to turnover or decreased sales performance, so the focus is on maintaining agent commissions while adjusting those for mid-level managers.
Adjustments to payment timing are also being considered. Some are exploring the option of reducing initial year payments while increasing the compensation proportion paid after contract retention. However, as financial authorities are scrutinizing any circumvention of regulations regarding payment timing or naming, actual payment plan designs may face restrictions.
Ultimately, even with the same 1200% rule applied, the impact felt by frontline agents will vary depending on the commission distribution and payment methods of each GA. An industry insider noted, "Agents have not yet received commissions under the new criteria, so there is not yet a significant sense of impact from the 1200% rule. The real reactions will emerge once the first commissions are paid at the end of this month."
* This article has been translated by AI.
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