South Korea: Insurance capital standard to be implemented in phases
Source: Asia Insurance Review | Aug 2019
The Financial Services Commission has announced that the Korean Insurance Capital Standard (K-ICS) as a new capital adequacy regulation will take effect in 2022 as scheduled. A grace period of 10 to 20 years will be given at the same time, with the standard implemented in stages.
The grace period, which is to help South Korean insurance companies prepare for the new regulation, is linked to the fact that the completion of implementation of Solvency II in the European Union is scheduled for 2032, reported Business Korea. From 2022 to 2024 or 2025, the current risk-based capital (RBC) and the K-ICS may be simultaneously applied so that the companies' shocks and risks can be mitigated and dispersed.
The K-ICS is to measure the available capital-to-capital requirement ratios of insurance companies by applying market price valuation to their assets and liabilities. The standard is scheduled to be introduced in step with the implementation of IFRS17 in 2022.
Insurance companies have expressed concerns over the burden attributable to the new standard. They must increase their capital to prepare for the new regulation by 2022. A