Explanation of Various Standard Changes and Overseas Trends
On-site Training Conducted for Practitioners
[Asia Economy Reporter Minwoo Lee] To help practitioners better understand the new solvency regime 'K-ICS' applied to insurance companies starting this year, the Financial Supervisory Service (FSS) has published a guidebook and is supporting various training programs.
On the 9th, the FSS announced that it has published the 'Insurance Company New Solvency Regime (K-ICS) Guidebook' to enhance the overall understanding of industry executives and practitioners responsible for risk management at insurance companies.
With the implementation of the new accounting standard 'IFRS17' this year, which evaluates insurance liabilities at present value, the solvency regime for insurance companies will also be completely revamped based on the fair value of assets and liabilities. The newly introduced K-ICS uses different methods from the existing Risk-Based Capital (RBC) system in various aspects such as asset and liability valuation methods, available capital calculation structure, risk confidence levels, required capital calculation methods, and risk mitigation techniques.
The published guidebook includes information necessary to understand the overall system, such as the background of K-ICS calculation and the basis for conclusions. Specifically, it allows readers to grasp international trends by comparing the calculation standards with the ICS being developed by the International Association of Insurance Supervisors (IAIS) and the market value-based solvency regimes implemented by the European Union (EU) since 2016. It also contains various explanations on solvency ratio calculation standards, including asset and liability valuation, available capital calculation, required capital calculation, risk mitigation techniques, the effect of corporate tax on required capital, and transitional measures.
The FSS plans to distribute this guidebook to insurance companies and related institutions and post it on its website. Additionally, practical training sessions explaining the guidebook and instructions on preparing work reports will be held for risk management personnel at the Life Insurance Education and Culture Center on the 12th and 13th.
An FSS official stated, "We will continue to communicate with the industry by listening to practical suggestions to ensure that insurance companies can smoothly transition to the new system."
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