Financial Supervisory Service Chief Meets Insurers: "Avoid Excessive Expansion... Focus on Risk Management"

Meeting Held with CEOs of 14 Insurance Companies

[Asia Economy Reporter Minwoo Lee] Lee Bok-hyun, Governor of the Financial Supervisory Service, met with insurance company CEOs and urged somewhat conservative management. Although the soundness and liquidity crisis triggered by last year's rapid interest rate hike was overcome, he requested efforts to stabilize the market and focus on risk management this year as well, given concerns about an economic recession.

On the 26th, Governor Lee held a meeting with CEOs of 14 insurance companies at the Life Insurance Education and Culture Center in Jongno-gu, Seoul, and made these remarks. He first asked them to focus on market stability rather than reckless expansion. He said, "Although the financial market has recently stabilized somewhat, market instability factors remain, such as the widening gap in trading volume between high-quality and non-investment grade bonds," adding, "This year as well, to prevent the insolvency of sound companies due to temporary liquidity shortages from triggering systemic risks within the financial industry, I ask each company to actively identify investment-grade firms and faithfully fulfill the role of institutional investors by supplying liquidity through various investment methods such as bond purchases."

He also emphasized the need to proactively respond to potential risks in preparation for increased volatility. He said, "As the risk of losses in economically sensitive assets is increasing recently, I ask insurance companies to strengthen screening and post-management of project financing (PF) loans and overseas alternative investments on their own," and "Please carefully review accounting systems and calculation results to ensure the stable implementation of IFRS 17 and the new Solvency II regime." The financial authorities also announced plans to share the results of real estate PF inspections and continuously communicate with the industry to establish the new soundness system.

In addition, he stressed the prevention of insurance fraud and sustainable management. Quoting Nobel Economics Prize winner Robert Shiller, Governor Lee said, "The more uncertain the future economy, the more important the role of insurance becomes," and added, "I hope the insurance industry will steadily grow while providing stability to the financial market and the public’s mind, and the Financial Supervisory Service will closely communicate and actively support this."

On the 26th, Lee Bok-hyun, Governor of the Financial Supervisory Service, held a meeting with insurance company CEOs at the Life Insurance Culture and Education Center in Jongno-gu, Seoul, and delivered opening remarks.