FSC held the third meeting of “Advancement Group for Insurance Capital Soundness.” At the meeting, the participants discussed system improvements in preparation for the implementation of IFRS 17 on insurance contracts; the discussions covered the improvement of the liability adequacy test, or LAT, and the establishment of the Financial Soundness Reserve. The changes to the liability adequacy test are intended to actively induce insurers to raise capital in preparation for the implementation of IFRS 17.
According to the notification, "the liability adequacy test is being operated to induce debts to be prepared in advance" for the market price evaluation of insurance liabilities due to IFRS 17. The IFRS 17 implementation has changed the cost method, which used to discount insurance liabilities at historical interest rates, to the current price method, which is discounted at interest rates. It is necessary to examine how to raise capital in preparation for the implementation of IFRS 17 if the profit or loss of insurers is sensitive to interest rate fluctuations.
Related Link (in Korean): Press Release
Keywords: Asia Pacific, Korea, Insurance, IFRS 17, LAT, Current Price Method, Insurance Contracts, Liability Adequacy Test, FSC
Previous ArticleBaFin Publishes Form and Guide for Less Significant Institutions
Next ArticleEBA Publishes Work Program for 2020
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.