South Korea's top financial regulator on Wednesday unveiled details of upcoming ordinances that will require insurers to gradually increase their capital reserves from December to help them better cope with changes in global accounting rules.
The Financial Services Commission will also ease some requirements on risk-based capital ratios for insurers to help them comply with the rules under the new ordinances, which will take effect from Dec. 1.
South Korea is one of more than 100 nations that will adopt the new global bookkeeping standard or the International Financial Reporting Standards 17, starting in January 2021.
Once adopted, some insurers in South Korea will face capitalization pressure because the new rules require such firms to report liabilities on a market value instead of book value of insurance policies.
In order to ease financial burdens for insurers, the financial regulator said it will recognize 90 percent of newly added capital this year as risk-based capital that shows an insurer's ability to pay policyholders.
The financial regulator will recognize 80 percent of new capital as risk-based capital in 2018, 70 percent in 2019 and 60 percent in 2020. (Yonhap)