The Financial Supervisory Service to Meet Insurance Executives Before Introducing the New Solvency Regime

[Asia Economy Reporter Changhwan Lee] The Financial Supervisory Service (FSS) announced on the 26th that it will hold a briefing session for insurance industry executives on the afternoon of the 29th in Yeouido, Seoul, ahead of the introduction of the new Solvency II system (K-ICS) next year.

The FSS plans to implement the new solvency system based on market valuation standards in January next year, in connection with the introduction of the new insurance accounting standard (IFRS17).

Korea's new solvency system was designed by referring to overseas solvency systems to establish the basic framework, and by using domestic statistics to set risk shock levels and correlation coefficients between risks, among others, so that it fits the characteristics of the domestic insurance industry.

Insurance companies are establishing plans individually to build calculation systems and internal control frameworks for adequacy verification, and intend to complete these before the system is introduced.

The FSS checked the preparation status of insurance companies for the new system as of the end of June and found some deficiencies, such as delays in building systems and verification procedures in some companies.

Accordingly, the FSS explained that it plans to provide on-site consulting after this briefing session to support the smooth implementation of the new system.

An FSS official forecasted, "With the introduction of the new solvency system, insurance companies' risk management capabilities and financial structures will be disclosed to the market more transparently."

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