Standard Delay
A total of 19 insurance companies, more than one-third of the total, asked the Financial Supervisory Service to postpone the implementation of the Korea Insurance Capital Standard (K-ICS). The ratio is over 50 percent when it comes to life insurance companies. The standard is for soundness assessment in which both assets and liabilities are calculated on a present value basis.
The 19 companies consist of 12 life insurance companies, six non-life insurance companies, and one reinsurance and surety insurance company. The grace period is up to five years and it can be applied to an insurer with a risk-based capital (RBC) ratio of over 100 percent, which is the legally required minimum level, and a ratio based on the K-ICS of less than 100 percent.
Each of the 19 said that the new insurance risk measurement method is too soon. In the K-ICS, required capital is supposed to reflect longevity, lapse, catastrophe, and expense risks. The companies said those need to be reflected gradually.
When it comes to an increase in required capital resulting from stricter equity risk measurement and stricter interest rate risk measurement, 12 and eight companies requested the grace period for each type of management, respectively. For example, KDB Life Insurance, Fubon Hyundai Life Insurance, and Hana Life Insurance said they would like to reflect a decrease in capital attributable to market value-based valuation in stages.