 |
| gettyimagesbank |
By Kim Bo-eun
Korean insurers are calling for a one-year delay in the introduction of IFRS 17, a new set of global accounting standards set to be introduced in 2022.
The new standards require the firms to boost their cash reserves amid worsening earnings in the saturated domestic insurance market.
The introduction of the IFRS 17 was already pushed back by a year, from 2021 to 2022, at an International Accounting Standards Board (IASB) meeting last November.
In December, associations representing European insurers requested the implementation to be delayed by an additional year.
A Global Federation of Insurance Associations meeting to be held in Romania, May 23 is set to address the matter of further delaying the introduction of the new standard.
"Global insurance associations have requested for the matter to be placed on the agenda of the meeting," an official of the Korea Life Insurance Association (KLIA) said.
"Insurers need time to prepare for the change ― they need to increase the amount of capital, as well as the number of competent actuaries and prepare a new accounting system," he said.
Large insurers have begun preparing new systems, but smaller firms have yet to even receive consulting on the changes that need to be made, the official said.
The new standards require insurers to measure liabilities of their insurance contracts by market value, not book value.
The IFRS 4 ― the current standard ― measures the liabilities of insurance contracts by book value.
In order for the firms to keep their debt ratio from rising, they need to increase their cash reserves. This is a challenge for insurers, for whom earnings are deteriorating as it is difficult to find new subscribers in the saturated domestic market.
The IFRS 17 is set to be implemented together with the K-Insurance Capital Standard (K-ICS), a local insurance valuation standard that calculates risk-based capital based on market value, which places a greater burden on insurers.
"A cautious stance is necessary in introducing new standards," the KLIA official said, noting it took decades for Europe to implement its current regulations governing insurers, Solvency II.
![[INTERVIEW] Im Si-wan finds own narrative for villain role in 'Emergency Declaration'](https://img.koreatimes.co.kr/upload/thumbnailV2/bfa7ef2cf863407995b8b34d77351afb.jpg/dims/resize/178/optimize)
