The financial authorities emphasized once again that the insurance industry should faithfully reflect the newly reviewed accounting system (IFRS17) ahead of the 2024 settlement of account.
The Financial Supervisory Service released a press release on the 5th, noting, “As the guidance period ends with this year-end settlement of account, we will focus our supervisory capabilities to ensure that the insurance industry faithfully reflects the reviewed matters in the settlement.”
Previously, the financial authorities had operated a guidance period last year regarding the actuarial assumptions of IFRS17 in response to ongoing confusion within the insurance industry. Later, they announced measures to improve insurance accounting, including enhancements to the resignation rates for non-guaranteed and low-guaranteed products, through the Insurance Reform Council to prevent IFRS17 from being misused as a short-term performance competitive tool.
They have also guided the results of reviews on accounting treatments of public rates, actual versus estimated accounting treatment, and the calculation standards for insurance contract margins (CSM) through the industry joint consultative body, written inquiries committee, and accounting review committee.
The FSS reiterated the need for stringent accounting measures ahead of the settlement of account amid rising political and economic uncertainties following the martial law, as a sentiment was detected in some quarters of the industry suggesting that accounting practices could be relaxed.
The FSS plans to proactively check major issues related to settlement audits by regularly holding meetings with external auditors of insurance companies and quickly identifying key inquiries related to the settlement from the insurance industry through its ongoing 'hotline.'
An FSS official said, “From this year-end settlement of account, accounting-related discussions must be properly reflected,” adding, “Even during the guidance period, if there are intentional, unreasonable accounting assumptions applied to inflate performance, they cannot avoid sanctions.” The official emphasized, “Considering the importance of the foundational assumptions of IFRS17 and recent uncertainties in financial markets, we will quickly establish and implement measures to strengthen insurance accounting supervision and inspection so that the market value evaluation system for insurance liabilities can be further stabilized.”