The insurance claim trust is emerging as a long-term new business in the insurance industry. Although actual managed assets and fee income are still modest, insurers can leverage existing policies and customer bases to expand their business into asset management for bereaved families after claims are paid.
According to the insurance industry on August 25, the cumulative contract amount for insurance claim trusts from three major life insurers—Samsung Life, Kyobo Life, and Hanwha Life—reached 850 billion won by the end of the first half of this year. The new contract amount for the first half of the year was 248.6 billion won, representing 54.1% of last year's total annual contract amount.
The insurance claim trust system allows policyholders to entrust their right to receive death benefits to a trust company, which then pays the benefits to the bereaved under predetermined conditions and timelines after the policyholder's death. Since its introduction in November 2024, the market has been expanding, particularly among life insurers.
However, the cumulative contract amount does not directly translate to the trust assets managed by insurers or their fee income, as actual funds only enter the trust upon the policyholder's death and payment of benefits. Currently, the contracts primarily signify a secured basis for future asset management and fee income for insurers.
This development is significant for insurers as it allows them to extend customer relationships, which previously ended with the payment of benefits, into asset management for bereaved families. If an insurer is selected as the trustee, it can manage and distribute the death benefits according to the trust agreement, providing funds for living expenses and education.
For insurers that have had a limited presence in the trust market, this could be an opportunity for business expansion. By the end of the first half of this year, the total trust assets managed by insurers amounted to 34.21 trillion won, accounting for only 2.1% of the overall trust market, which is valued at 1,606.73 trillion won. This is significantly lower compared to banks at 45.5% and securities firms at 23.5%. Insurers believe they can differentiate themselves in the insurance claim trust market by leveraging their existing policies and exclusive sales organizations.
An industry insider stated, “Insurers are latecomers to the trust market, but the ability to connect existing death benefit contracts to trusts is a differentiating factor. Just as the retirement pension market was small in its early stages, the demand for insurance claim trusts could grow as the system becomes established.”
Currently, Samsung Life is leading the initial market. As of mid-August, Samsung Life's cumulative contract amount for insurance claim trusts was approximately 800 billion won, widening the gap with Kyobo Life, which is estimated to be around 100 billion won. Samsung Life aims to exceed 1 trillion won in cumulative contracts by the end of this year.
Samsung Life holds a total of 60 trillion won in death benefits from its whole life and term life insurance contracts. The company can also promote trust enrollment to existing customers through its approximately 45,000 exclusive agents, which is seen as a key factor in its market leadership.
Competitors are also leveraging their strengths to expand their market presence. Kyobo Life operates a comprehensive asset management team consisting of about 70 professionals, including certified financial planners (CFP), lawyers, tax accountants, and asset management experts. Hanwha Life, a latecomer, has established the industry's first system to handle the entire process of enrolling in insurance claim trusts remotely.
In contrast, insurers with relatively smaller exclusive sales organizations and existing death benefit contracts are facing challenges in expanding their initial market. While agents from general insurance agencies (GA) can identify potential customers for insurance claim trusts, there are concerns that the lack of established referral procedures, performance recognition, and compensation standards makes it difficult to actively utilize this channel.
A GA industry insider remarked, “There are no specific criteria for recognizing and compensating sales performance when GA agents connect potential insurance claim trust customers with insurers. To expand the market, it is necessary to establish related procedures and internal control standards.”
* This article has been translated by AI.
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