Accounting Standards Board to Implement 'Insurance Contracts' Standards from January 2023

[Asia Economy Reporter Minji Lee] The Korea Accounting Standards Board (KASB) approved the revised exposure draft of Insurance Contracts (K-IFRS 1117) on the 30th and will implement it from January 1, 2023.

According to the Financial Services Commission on the 1st, the Accounting Standards Board's Accounting Standards Committee announced a revised exposure draft of Insurance Contracts, originally established and approved in May 2018. The Accounting Standards Committee is an organization responsible for deliberating and approving matters related to accounting standards.

The main content of the insurance contracts is to measure insurance liabilities at current value (market value) using the discount rate at each reporting date, rather than at cost.

Also, insurance revenue will be recognized on an accrual basis reflecting the guarantees and services provided each period, instead of on a cash basis when premiums are received. The Insurance Contracts standard was originally scheduled to be implemented in 2021 but will now be effective from January 1, 2023.

The revised exposure draft of the Insurance Contracts standard will undergo external consultation until the end of this year and will be finally deliberated and approved by the Accounting Standards Committee in the first half of next year. Afterwards, it will be reported to the Securities and Futures Commission and the Financial Services Commission, with the final Insurance Contracts standard planned to be announced in the second half of next year.

The Financial Services Commission explained, "With the approval of this revised exposure draft of the Insurance Contracts standard, market uncertainties regarding the introduction and implementation timing of IFRS 17 will be resolved," and added, "We will steadily prepare for the introduction of IFRS 17 in 2023, centered on the 'Insurance Capital Soundness Advancement Task Force.'"