Wednesday, April 25, 2018

Korean insurers brace for new accounting rule

Changes in accounting rules will require Korea’s insurance providers to maintain a two-track record of their financial statements, beginning next year.

Specifically, insurers that will be affected are those affiliated with financial holding companies.

The new requirement is a cause of concern in the industry, considering that it will affect insurance subsidiaries with low capital reserve levels.

The double record system will take effect through to 2020.

Following this year’s decision by the International Accounting Standards Board, a new set of International Financial Reporting Standards called IFRS9 will take effect next year.

Under the new standard, financial instruments must be reported at fair value, reflecting impairment of financial assets and hedge accounting.

A higher level of capital reserves is therefore needed to cover possible losses.

Insurers have been given a three-year grace period to become thoroughly acquainted with the new standard

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