Strengthening Verification of Insurers' Liability Reserves... Financial Supervisory Service Launches TF

Strengthening External Verification Effectiveness of Reserve Funds
Preparation of Various Manuals for External Verification
Enhancement of Qualifications and Accountability of Actuarial Firms

[Asia Economy Reporter Minwoo Lee] With the introduction of the new international accounting standard 'IFRS 17,' the Financial Supervisory Service (FSS) plans to create practical guidelines to ensure the external verification system for insurers' reserve adequacy functions effectively, while also strengthening the responsibilities and obligations of actuarial firms in the long term.

The FSS organized a joint task force (T/F) to improve the external verification system for reserves, consisting of actuarial firms, accounting firms, and insurers, and held its first meeting on the 9th at its headquarters in Yeouido, Yeongdeungpo-gu, Seoul.

This is based on the judgment that securing the adequacy of the calculation results is increasingly important as the method for calculating insurers' reserves becomes more complex with the introduction of IFRS 17.

During the meeting, the general direction of the T/F's activities was decided. First, a separate T/F working group will be formed to develop short-term self-regulatory improvement measures to enhance the effectiveness of the external verification system for reserves. This includes preparing practical manuals on verification standards and methods so that external verification institutions such as actuarial firms can properly apply the principles stipulated by law in practice, creating various quantitative indicators, and reviewing standard verification times that can be referenced when estimating appropriate verification hours.

Another T/F working group will pursue long-term system improvements. For example, it will establish qualification confirmation procedures for actuarial firms capable of performing external verification and impose strong accountability for inappropriate external verification performance.

Cha Suhwan, Deputy Director of the FSS, stated, "If insurers do not adequately reserve for policyholders' liabilities, the trust in the insurance industry will be severely damaged, causing enormous consumer harm," and added, "We ask for the active cooperation of the institutions participating in the joint task force to prepare reasonable improvement measures."

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