FSS Publishes 'Best Practices for Preliminary Disclosure' of New Insurance Accounting Standards

[Asia Economy Reporter Kim Jin-ho] The Financial Supervisory Service (FSS) announced on the 1st that it will prepare and disclose "Best Practices for Preliminary Disclosure" to ensure the thorough reflection of the impact of the new insurance accounting standards (K-IFRS) to be implemented from 2023.

Insurance companies must use these examples to disclose quarterly the major changes in accounting policies, preparation status for implementation, and financial impacts on their financial statements and websites. An FSS official explained, "It is expected that stakeholders will be able to easily grasp the effects of changes in insurance companies' accounting standards in advance, thereby reducing information asymmetry with the companies."

First, insurance companies should provide preliminary disclosures of changes in accounting policies due to the application of the new standards to alert stakeholders to potential fluctuations in the company's financial figures. This year, they must disclose the main contents of the accounting policy changes effective from 2023, and next year, they must disclose the key differences between the accounting policies the company will apply and the existing policies.

The application of the new standards involves building settlement systems and employee training, and insurance companies must also disclose the preparation status and future plans related to these. Additionally, they should gradually inform about the financial impacts resulting from the application of the new standards.

The FSS plans to guide the "Best Practices for Preliminary Disclosure" through the Life and Non-life Insurance Associations and the Korean Institute of Certified Public Accountants so that insurance companies, accounting firms, and investors can utilize them in their work. Furthermore, the FSS will continuously monitor the status of accounting settlement system establishment by each insurance company and compliance with preliminary disclosure obligations to facilitate the smooth landing of the new standards. In addition, through the "Insurance Capital Soundness Advancement Task Force," the FSS will promptly prepare and disseminate revisions to related laws and regulations, including insurance supervisory accounting.