South Korea's Financial Services Commission approves insurer actuarial reporting rules and expanded risk assessments

South Korea's Financial Services Commission approved amendments requiring annual actuarial assumption reports and stronger internal controls for insurers, following its September consultation. Starting with fiscal 2026 accounts, insurers must submit reports to the Financial Supervisory Service by their annual business report deadline, covering assumptions used to calculate policy reserves and required solvency capital. Reports must explain calculation methods, major changes and validation results, and address cash flow modeling and internal controls. From Jan. 1, 2027, insurers must establish controls for deriving and changing assumptions and report changes made during the year, including their reasons and financial effects, to the board's risk management committee. Changes resulting from legislation or having minimal financial effects may be exempted from committee reporting. Supervisory assessments will also examine insurers' management of interest rate exposure and outsourced sales risks. A qualitative assessment of operational risk management for corporate insurance agency channels begins Jan. 1, 2027, strengthening insurers' responsibility for those distribution arrangements. A quantitative duration gap indicator, measuring sensitivity arising from differences between asset and liability durations, takes effect Jan. 1, 2028, rather than in 2027 as proposed. The later start reflects market conditions and the need for preparation time. The amendments also allow medical indemnity insurance converted under a discount scheme to be attached as a rider to an existing main policy, exempting it from the requirement to be sold as a standalone product. The scheme, planned for November 2026, offers eligible first and second generation policyholders a 50% premium discount for three years when switching to fifth generation coverage. Other changes base annual catastrophe reserve allocations on the current year's eligible premiums and align financial statement presentation with International Financial Reporting Standard 18 from Jan. 1, 2027. The property project finance credit exposure limit included in the consultation is being pursued separately, with implementation targeted for Jan. 1, 2027.