Incar nearly exhausts full-year settlement payments in first half

Global Financial's nine-month total surpasses last year's annual figure

Loans to agents also surge, raising concerns over regulatory evasion

[Getty Images Bank]
[Getty Images Bank]

Major general agency, or GA, firms rushed to pay out large settlement bonuses to recruited insurance agents in the first half of this year, just before a regulation capping agent recruitment costs was extended to cover them. Data also show that loans extended to agents at some GA firms grew rapidly during the same period, raising questions about whether the loans were used as a backdoor to circumvent the new rules.

According to data the National Assembly's Political Affairs Committee obtained from the Financial Supervisory Service on four major GA firms — Incar Financial Service, GA Korea, Global Financial Sales and Prime Asset — Incar Financial Service paid 16.96 billion won ($12.8 million) in settlement support payments to experienced agents in the first half of this year. That amounts to 97 percent of its full-year payout for last year, which stood at 17.43 billion won, spent in just six months. Incar abolished its settlement support program for experienced agents in July. Payments to rookie agents also jumped, reaching 2.68 billion won in the first half alone — 77 percent more than the 1.51 billion won paid for all of last year.

The scale of agent recruitment also expanded. Incar brought in 8,179 new agents in the first nine months of this year, already surpassing last year's full-year total of 7,424. Of those, 5,422 were experienced agents, and 3,884 of them transferred from other insurance agencies.

Settlement payments at Global Financial Sales have grown year after year. The firm paid out 13.73 billion won in the first nine months of this year, exceeding last year's full-year total of 10.69 billion won and nearly quadrupling the 3.56 billion won recorded in 2022. The firm also clawed back 3.02 billion won in repayments from agents this year.

The 1200% rule caps the total compensation — including commissions, incentive awards, travel expenses and settlement support payments — that an agent can receive within one year of signing an insurance contract at 12 times the monthly premium. The rule was first applied to exclusive agents of insurance companies and was extended to GA firms in July. Industry observers say the expansion triggered a last-minute scramble to lock in agents before the regulation took effect.

Also drawing scrutiny are loans extended by GA firms to their affiliated agents and branch offices, which are typically repaid by deducting amounts from future commission payments.

Incar's loan disbursements fell from 3.63 billion won in 2022 to 1.85 billion won in 2024, then jumped to 10.65 billion won last year. In the first nine months of this year alone, the figure reached 20.15 billion won — double last year's full-year total and 5.6 times the 2022 annual figure. Global Financial Sales saw its loans surge from 760.84 million won in 2022 to 9.2 billion won in the first nine months of this year, a twelvefold increase. By contrast, GA Korea, which abolished its settlement support program entirely in July, recorded no loan disbursements during the same period. Prime Asset also showed no loan expenditures in the submitted data.

That loans could serve as a workaround for settlement payments is explicitly acknowledged in GA firms' own internal rules. Global Financial Sales' operating guidelines for agent settlement support payments list as a prohibited act "providing loans or similar benefits to insurance agents at low or no cost and arranging repayment through future commissions — in effect paying settlement support through a backdoor channel to evade the 1200% rule."

In response, the Financial Supervisory Service told the National Assembly that it "has conducted on-site inspections at multiple GA firms in connection with insurance solicitation practices and is carrying out follow-up measures, with final outcomes not yet determined."


won@heraldcorp.com
hyuk@heraldcorp.com