Korean life insurers face IFRS 17 challenge

April 26 2017 by InsuranceAsia News Staff

Implementation of International Financial Reporting Standard (IFRS) 17 will challenge the reported capital positions of life insurers in Korea, according to Moody’s Investors Service.

However, the rating agency says the implementation of IFRS 17 will promote structural improvement and value creation in Korea’s life insurance industry over time.

The adoption of IFRS 17 will require life insurers to measure their policy liabilities at current market values, which means insurers will have to provide higher levels of reserves.

But Stella Ng, an analyst at Moody’s, stressed that the IFRS 17 will improve insurers’ pricing discipline and product mix by better reflecting the true economic cost of embedded options and guarantees in their products.

Ng added that the implementation will also encourage insurers to sell more long-term protection products instead of volume-driven, short-term savings products.

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