Monday, July 24, 2017

Korea relaxes rules as IFRS implementation nears

Korea’s Financial Supervisory Service (FSS) is relaxing some capital rules and other technical standards for insurance firms to help insurers alleviate potential fallouts from the changes in global accounting rules.

The FSS announcement comes as Korea joins more than 100 countries in adopting the new global bookkeeping standards, the International Financial Reporting Standards (IFRS) 17, expected to take effect in January 2021.

The FSS said it will extend the duration of risk-based capital ratio of an insurer to 25 years from the current 20 years. The duration will be further extended to 30 years in 2018.

In a statement, the regulator said the revised rule will be applicable to insurers starting next month if they want to adopt it.

Once the IFRS 17 is adopted, some insurers in Korea are expected to face capital pressure.

The new accounting standard, however, is likely to have a positive impact on Korean firms going forward, according to Moody’s Investors Services.

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