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Effects of Channel Diversification on New Contracts in Life Insurance Companies
Journal of Insurance and Finance
2018, 29(4),
pp.3-34
DOI :10.23842/jif.2018.29.4.001
Publisher : Korea Insurance Research Institute
Research Area : Business Management
DOI :10.23842/jif.2018.29.4.001
Publisher : Korea Insurance Research Institute
Research Area : Business Management
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This paper examines the performance of monthly initial premiums and channel diversification across a sample of life insurers that operate in solicitors (exclusive agents) organization from 2007 to 2016. While the size of registered solicitors decreased by 1.7% per year, the size of active solicitors decreased by 3.3% during the same period. The active rate of solicitors was around 61.0% in 2016. As the life insurers' dependence on new business has diversified into various channels such as independent agency (GA), bancassurance, and direct channels, the share of solicitors has dropped from 62.5% in 2007 to 42.6% in 2016. Despite the downsizing of solicitors, exclusive agents are still an important factor for new business. Panel fixed effect models represent that the overall performance of new contracts increases by 0.537% when the size of active solicitors increases by 1%. As the share of whole-life insurance products increases, the degree of channel diversification decreases, indicating a significant relationship between the product portfolio and the channel strategy.
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