Journal of Rural Development
The Effect of Sales Quota Regulations in Bancassurance on Nonghyup’s Commission Income
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AuthorYeon, Kwanghun
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Publication Date2024.09.20
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Original
In August 2003, Korea amended the Insurance Business Act to introduce bancassurance, which permits the sale of insurance products through financial institutions such as banks and securities companies. A sales quota regulation was implemented to prevent potential consumer harm from this initiative. This regulation prohibits agricultural and cooperative federations with total assets of 2 trillion won or more from selling products of a single insurer beyond a specified ratio. Although there were concerns about the potential decline in commission income for Nonghyup, no empirical analysis had been conducted on the causal effect of these sales quota regulations on their commission income. Addressing this research gap, this study analyzed data from the Financial Supervisory Service`s Financial Statistics Information System, utilizing the difference-in-differences method. The analysis found that the sales quota regulation resulted in a reduction of approximately 1.5 billion won in annual commission income per regulated Nonghyup. Furthermore, the reduction in commission income was greater for livestock cooperatives compared to agricultural cooperatives. These findings highlight the need for government policies to mitigate the profit reduction experienced by agricultural and livestock cooperatives due to the sales quota regulation. Additionally, the unique characteristics of these cooperatives should be considered in policy development.
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