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Delay of IFRS 17 introduction to be discussed next month
By Kim Bo-eun
By Kim Bo-eun
Attention is growing over the International Accounting Standards Board (IASB)'s meeting next month, as the board is set to discuss when the new accounting standards IFRS 17 will be introduced.
The introduction had been set for January 2021, but was delayed by another year due to opposition from the member organizations.
Under the new standards, liabilities in insurance contracts will be measured by market value instead of book value.
According to industry sources, European Union (EU)-based members are calling for a further delay, which may influence the board's decision. Europe-based insurers sent a letter last September to the IASB calling for the implementation date for IFRS 17 to be delayed to January 2023.
The agenda is set to be discussed at the meeting to be held in London from Feb. 24 through Feb. 28.
"Korean insurers also want the introduction to be delayed, but Korea pledged full adoption of the new standards a decade ago, and the government has been preparing for IFRS 17 to be introduced in 2022," said an official of the Korea Life Insurance Association (KLIA).
The official said it would be unclear whether the IASB will accept the EU-based member's request, as the introduction was already delayed by one year in June 2019.
If the IFRS 17 is introduced in 2022, Korea is set to be hit hardest among the 14 members of the IASB. The member nations are the Netherlands, the U.K., Germany, France, Brazil, Australia, the U.S., Canada, China, Japan and Korea.
"This is because insurers in Korea sold a bulk of long-term high-yield policies, which are now reaching maturity," the KLIA official said.
"They need to secure huge amounts of capital ahead of the introduction of the new accounting standards, at a time when circumstances have become especially tough amid the low interest rates."