The South Korean Financial Supervisory Service (FSS) has decided to stop the deviant accounting practice applicable to domestic life insurers, including the country's biggest life insurer Samsung Life Insurance.
The decision was made at a joint meeting on 1 December 2025 of the FSS, the Korea Accounting Standards Board and representatives of accounting firms and academia, according to local media reports.
The FSS and the Korea Accounting Standards Board also clarified that the newly established principle would not be applied retroactively to prevent further disruption, reported The Chosun Daily.
Deviant accounting is a practice that allows life insurers to mark their share to be returned to dividend policyholders as "policy equity adjustment" instead of insurance contract liabilities. The core issue is about whether dividends from participating insurance policies sold by life insurers in the past should be classified as a liability that the insurer must repay.
In 2023, South Korea adopted the new international accounting standard for insurance (IFRS17). Under this standard, the dividends for participating policyholders are generally recognised as equity. However, this approach significantly reduces the insurer’s insurance liabilities on the balance sheet.