By Yoon Young-sil | Business Korea | December 6, 2022
The Financial Supervisory Service announced on Dec. 5 that the New Korea Insurance Capital Standard (K-ICS) would be implemented next year in step with the implementation of IFRS 17.
Under the new standard, market value-based appraisal will be applied to all assets and liabilities unlike in the current risk-based capital assessment, in which cost-based appraisal is applied in part.
The agency newly defined financial position statements for soundness supervision for the implementation of the new standard. In the statements, net assets are divided into core capital and supplementary capital depending on the capacity of loss absorption. In addition, a new required capital calculation method will be introduced with longevity, termination, business expenses and asset concentration added to risk factors.
“With the new standard, fluctuations in the risk-based capital ratio are expected to be more effectively controlled regardless of changes in market environment and policy determinations,” the agency said.