With Stock Market Boom and ELS Sales Blocked, Variable Insurance Sales Soar Tenfold in Three Years

Stock Market Boom and Non-Interest Income Strategies Drive Surge in Sales
Sales Growth Expected to Slow This Year Due to Commission Rule Changes and Increased Market Volatility
"Disputes Possible Like DLF/ELS Cases... Risk Disclosure Must Be Strengthened"

The volume of variable insurance products sold by commercial banks has surged nearly tenfold over the past three years. This trend is attributed to a combination of factors: increased preference for investment-type products driven by a strong stock market, growing demand for tax-free benefits, and strategies by banks to secure non-interest income. However, some warn that, as seen in previous cases involving derivative-linked funds (DLFs) and equity-linked securities (ELSs), market volatility could lead to a spike in disputes. They stress the importance of verifying consumer risk profiles and providing clear risk disclosures to prevent issues such as insufficient risk notifications or failing to assess investors’ suitability.

With ELS Sales Blocked, Banks Rushed to Variable Insurance... Sales Up Tenfold in Three Years

As of March 20, 2026, the combined sales volume of variable insurance products at three major commercial banks—KB Kookmin, Shinhan, and Woori—jumped from 94.4 billion won in 2023, to 735.5 billion won in 2024, and further to 985.9 billion won in 2025. Over three years, this represents an explosive tenfold increase.

The surge in variable insurance sales began in earnest in 2024, coinciding with large-scale losses on Hong Kong H Index-based (Hang Seng China Enterprises Index, HSCEI) ELSs, which sharply curtailed ELS sales at bank branches. As ELS sales became virtually impossible and commission income disappeared, banks expanded sales of variable insurance as an alternative product. Variable insurance thus became a viable way for banks to secure stable non-interest income.

An executive at one commercial bank said, "When it became difficult to meet our non-interest income targets due to the effective halt in ELS sales, we had no choice but to expand variable insurance sales as an alternative. From the perspective of departments in charge of investment-type products, with ELS blocked, we urgently needed to push other non-interest income products such as bancassurance." At that time, some banks even operated dedicated counters for variable insurance sales and assigned one or two dedicated salespeople per branch to boost results.

The stock market was also booming. Last year, the KOSPI index posted a record annual increase of 76%. Not only high-net-worth individuals seeking year-end tax-free benefits but also retail investors seeking to diversify their portfolios flocked to variable insurance. This is because a portion of the insurance premium is invested in stocks and bonds, allowing insurance payouts or surrender values to increase depending on investment performance.

A commercial bank branch in Seoul on the 30th. Photo by Jin-Hyung Kang aymsdream@

Revised Commission System Weakens Sales Momentum... "If the Market Shakes, DLF/ELS-type Disputes May Occur"

However, the situation has changed this year. Most commercial banks expect the growth of variable insurance sales to slow somewhat in 2026. This is due to new financial regulations requiring sales commissions to be recognized over up to ten years, instead of being fully booked as revenue in the year of sale. Since commissions no longer contribute as much to short-term results, banks have less incentive to aggressively sell these products. Additionally, recent military conflict between the United States and Iran has heightened market volatility, dampening demand for variable insurance. Early this year, financial authorities reportedly instructed banks to refrain from aggressive stock investment-related business, further tightening the sales environment.

There are also concerns that consumer protection issues may become more prominent in the future. Although variable insurance is structured as insurance, it fundamentally has the characteristics of a financial investment product. A decline in the underlying stock index can directly reduce insurance payments or surrender values. Thus, if consumers are not fully and clearly informed in advance about product structure and the risk of losses, there is a high risk of mis-selling.

Ji Yong Seo, professor at the Business Administration Department of Sangmyung University, stated, "When banks sell variable insurance, confusion with deposits or insufficient explanations often lead to frequent mis-selling. If market volatility increases, as in the DLF and ELS incidents, disputes could surge. Therefore, banks need to be especially cautious about failing to check investors’ risk profiles or providing inadequate risk disclosures."

Given the high level of trust consumers place in bank channels, analysts say that banks should be even more rigorous in explaining principal loss risk, volatility, and revenue structure during sales processes.

Choi Jaewon, professor at the Department of Economics at Seoul National University, commented, "Consumers who visit banks tend to believe that banks sell safer financial products than other sectors. Therefore, even when selling the same variable insurance products, banks must be thorough in disclosing loss risks—more so than insurance companies or other financial firms—to reduce the risk of mis-selling."

This content was produced with the assistance of AI translation services.