IFRS 17 with Insurance

 

A prediction has been made that the introduction of International Financial Reporting Standards 17 (IFRS 17) with insurance liability market valuation as a core content will led to the promotion of foreign capital’s investment in Korean insurers.

"The International Accounting Standards Board (IASB) is currently finalizing the IFRS 17, which will be announced in the coming May,” said Seo Jung-woo, a member of the IASB, at the "Introduction and Response" IFRS 17 Seminar held by the Korea Insurance Development Institute on March 30.

"It is impossible to compare Korea's insurance companies with other countries’ insurance companies at present due to differences in the accounting system. Therefore it is difficult for Korean insurance companies to raise their capital abroad, and even if foreign investors want to invest in Korean insurance companies, they do not have comparable information which hamper their investment,” said Seo, adding, "But reports prepared in accordance with the IFRS 17 can be used anywhere in the world, so investment in Korean insures will be boosted."

"Current accounting systems of insurers are too difficult for ordinary investors to understand such as putting all confusing figures into the comprehensive income category," said Steve Cooper, a member of the IASB who visited Korea with Seo. “In fact, global investment funds fill one third of their portfolios with financial stocks, but not any stocks of insurers.

As the insurance industry pointed out that the introduction period was too short, it was impossible to delay the introduction, so insurers suggested that there was no way other than hastening preparations. "It will take another year for the Korean financial authorities to issue the Korean version of the standard after the IFRS 17 standard is released," Seo said, adding,” "On top of that, insurers are required to complete preparations for introduction one year before the first year of enforcement. Thus, the time given to insurers is only one year and six months.”

"If the IFRS 17 is introduced, it will be burdensome for Korea's insurance companies that have sold a lot of high-interest products in the past," he said. "However, Korea, a country that will fully introduce the IFRS 17, cannot turn back the time. So I hope that Korean insurers will well prepare for the introduction of the international accounting standards and become a model country of the international accounting standards."

 

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