6 days Ago By Korea Bizwire
South Korea to Ease Capital Rules for Insurers to Reduce Financial Strain (Image created by ChatGPT) SEOUL, April 29 (Korea Bizwire) — South Korea’s financial regulator said Tuesday it plans to ease capital adequacy requirements for insurance companies to help lessen their burdens and raise the quality of their capital base. The Financial Services Commission said it will complete procedures needed to revise related laws on insurers’ capital adequacy ratio by the end of September. Under proposed the measures, the so-called capital adequacy ratio under the Korean Insurance Capital Standard (K-ICS) will be lowered to 130 percent.
Since 2001, insurance companies here have been advised to maintain their capital adequacy ratio at above 150 percent. The ratio refers to the amount of available capital compared with required funds and indicates a financial firm’s financial soundness. Due to regulations, financial companies are required to keep the ratio above 100 percent.
In 2023, the regulator introduced the K-ICS, under which insurers have been in a rush to raise capital to meet required funds, which in turn increased their financial costs. The average capital adequacy ratio of insurance firms had stood at 218.3 percent as of end-September.
The regulator said other regulations, such as reserves against cancellations of insurance policies, will be eased as well. (Yonhap).
