Why foreign life insurers have so many executives?
There are 24 life insurance companies in Korea. Excluding small-sized players, 18 outfits have more than 250 employees as of this April, according to the Korea Life Insurance Association.
A total of 23,610 employees and 458 executives are on the payroll of the 18 companies. In other words, an executive oversees some 51.55 staff members on average, and the number varies widely for each company.
For example, the figures are very small at 14.34 for AIA Korea and 16.41 for Prudential Korea compared to 85.67 for Kyobo Life Insurance.
Along the same line, the director-employee ratios are very high at 6.97 percent for AIA and 6.09 percent for Prudential against a mere 1.17 percent for Kyobo.
In AIA, which is headed by CEO Cha Tae-jin, 38 directors govern 545 employees while in Kyobo, which is led by Chairman Shin Chang-jae, 43 executives manage 3,684 workers.
In Prudential, whose CEO is Kurtis Jang, 29 executives manage 478 employees.
Watchers point out that AIA and Prudential run counter to the recent trend of flattening organizations and eliminating senior manager positions.
“Calculating the right number of executives is tricky. There is no one-size-fits-all figure in all organizations. But the difference between AIA and Kyobo is way too big as they are in the same business,” said a source familiar with the issue said.
“Korean arms of foreign insurers seemingly tend to have many executives. They have unique departments like strategic compliance or future growth. In some cases, they appear to inflate job titles for some reason.”
Indeed, two other foreign life insurers top 5 percent in the executive-employee ratio – 5.49 percent for MetLife Korea and 5.41 percent for Lina.
Only the four outfits mentioned above of AIA, Prudential, MetLife, and Lina surpass the 5-percent plateau among the 18 major life insurers in Korea.