(1) Reasons for Proposal

This Amendment aims to modify related provisions to enable insurance companies to use coinsurance as a means to restructuring of insurance liabilities so that they can be prepared for the implementation of international accounting standards for insurance business (IFRS17) and the new solvency margin requirements (K-ICS) in 2022

(2) Major Provisions

A. Standards on accumulation of insurance premium by insurance companies insured by coinsurance companies (Article 6-11(2), Article 6-18(2), Article 7-13 (3))

Provide for a standard on accumulating reserves for premiums (i.e., the amount notified by insurance companies) and modify related regulations as, for coinsurance, savings insurance premium as well as risk insurance premiums are paid by insurance companies, and the insurance companies that purchase coinsurance need to accumulate reserves for premiums.  

B. The effect of interest rate risks transferred needs to be reflected on the solvency margin requirements (Article 7-2 (3)) 

Modify provisions to reflect the interest rate risk being transferred through coinsurance as the current regulations do not require the effect of interest rate risks of insurance companies being transferred to coinsurance companies to be recognized. 

C. Obligation of insurance companies to report coinsurance contracts (Article 7-12 (1) 3) 

Add the obligation of insurance companies to report the content of coinsurance contracts signed to the Governor of the Financial Supervisory Service within one month after signing thereof. 

D. Establishment of the permitted scope of coinsurance contract (Article 7-12 (2) 8, 9) 

Provide for eligible types of coinsurance and specify methods for dealing with eligible coinsurance companies losing eligibility pursuant to Article 63 (2) and (3) of the current Enforcement Decree of Insurance Business Act. 

E. Accounting standards (Article 7-13 (4)) 

Provide for the accounting treatment regarding cases where the liability reserves being transferred to coinsurance companies exceed the book value of such liability reserves.