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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 : Social Science > Business Management
  • Received : April 11, 2018
  • Accepted : November 15, 2018
  • Published : November 30, 2018

Lee Kyonghee 1 Chulkyung Ahn 2

1상명대학교
2보험연구원

Accredited

ABSTRACT

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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