Kathmandu. South Korea’s financial regulator requires insurers to meet higher capital quality standards with a new minimum proportion for core capital under the Korean Insurance Capital Standard (K-ICS) from 2027.
The Financial Services Commission (FSC) of Korea did so on January 13. The FSC has said that the ratio between the core capital and the required capital will be set at 50 percent or more. ’
Korea’s Yonhap news agency reported that core capital will include paid-up capital and retained income, and the rules aim to ensure insurers have enough high-quality capital to absorb losses from market fluctuations or financial stress. The regulator said the move would increase the cost of funding for insurers. This is because equity capital is generally more expensive than other sources such as subordinated debt. ’
Insurance companies with core capital ratios below 50 per cent will be subject to reform measures. However, the FSC has said that the grace period will be granted.
