FSS to Operate Joint Consultative Body for Stabilizing IFRS17 in Insurance Sector

On the 11th, the Financial Supervisory Service (FSS) announced that it will operate a joint consultative body composed of external experts to ensure the stable establishment of the new International Financial Reporting Standard 17 (IFRS17) introduced to the insurance sector last year.

With the introduction of IFRS17 last year, which evaluates insurance liabilities at fair value, accounting practices in insurance companies have undergone significant changes. In response, financial authorities took measures to minimize market confusion, such as issuing guidelines related to the evaluation of insurance liabilities last year. As part of efforts for a smooth transition, a settlement inspection task force (TF) was operated from December last year until last month. The FSS plans to continue supervising to support the establishment of the new insurance accounting standard and to enhance the reliability and rationality of the insurance industry.

First, the FSS plans to operate a joint consultative body composed of insurance and accounting departments and external experts for effective issue review and response. It will be operated flexibly by inviting experts on specific topics.

Additionally, a process will be established to receive and review issues through an IFRS17 hotline (shared email). Issues with significant practical impact will be carefully reviewed through discussions in the joint consultative body, while other issues will be promptly reviewed and addressed mainly by the practical departments. If necessary, the FSS plans to enhance practical utilization by sufficiently explaining review results to stakeholders through meetings and press releases.

Inspections and communication related to IFRS17 will also be strengthened. A triple inspection system will be established, including self-inspections by insurance companies, peer reviews among companies, and inspections by the FSS. Substantive self-inspections will be activated through checklists prepared based on inquiry and response cases. Peer reviews among companies will be conducted and results will be fed back to improve promptness and effectiveness. The FSS will monitor work processes such as liability evaluation algorithms and management of basic assumptions, and conduct flexible on-site inspections involving experts from relevant fields when major issues arise.

Furthermore, relay meetings will be held separately for producers of financial information (insurance company settlement officers), verifiers (external auditors such as accounting firms), and users (analysts and reporters) to strengthen communication with the market. Through this, the FSS plans to identify issues early and listen to suggestions. In addition, it plans to support the establishment of market discipline by operating a temporary guidance period within the year. An FSS official stated, "We will pursue detailed tasks to minimize market concerns and confusion regarding IFRS17 issues and to ensure that the new insurance accounting standard is stably established in the market," adding, "We will also continue efforts such as active communication with all sectors."

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