The South Korean insurance industry asked the Financial Supervisory Service (FSS) to delay the implementation of “K-Insurance Capital Standard (ICS),” a new insurance liability market valuation system, but the FSS refused, saying, “The system will take effect in 2021 as scheduled.” In this regard, the insurance industry insists that it would suffer a growing burden when the new financial reporting standard IFRS 17 and the K-ICS come in at the same time in 2021.
An official from the FSS recently said, “With the introduction of the IFRS 17, the available and demanded capital calculation method under the current risk based capital (RBC) system also needs to be completely revised as a way for the market-to-market liability valuation. In this respect, it is inevitable to introduce the IFRS17 and the K-ICS at the same time.”
The FSS plainly refused to the insurance industry’s request for the delay of the K-ICS implementation. Previously, the insurance industry asked the FSS to postpone the implementation of the K-ICS, saying that the adoption of the IFRS 17 and the K-ICS at the same time will increase its burden. At a recent press conference, Shin Yong-kil, chairman of the Korea Life Insurance Association, said, “There is no country that introduces both international accounting standards and financial regulators’ soundness standards at the same time. Delaying the implementation of the K-ICS is a way to avoid confusion.”
However, the FSS said it is possible to phase in the system considering insurance firms’ preparation and acceptability. The FSS is planning to evaluate the impact assessment once again next year and decide on a concrete introduction plan at the end of next year, working on a revision.