부산대학교 도서관

The International Financial Reporting Standard 17 (IFRS17), in which insurance contract liabilities are estimated at market value and the revenue recognition method is changed, will be implemented in 2023 after a long preparation period. Compared to the existing accounting standard (IFRS4), IFRS17 is expected to provide more economically meaningful information for insurance companies. This could potentially affect their management strategies. This study examines the impact of IFRS17 on insurance companies’ business activities, such as profit and capital, business policies, and future changes, in order to better understand its implications. The adoption of IFRS17 will result in different levels of profit and capital for insurance companies depending on the transition method used. Insurance profits can be generated stably throughout the insurance period, but there may be differences in margin rates by product. Protection-type products appear to have relatively higher margin rates compared to savings-type products. Meanwhile, the burden of managing insurance companies’ capital has been alleviated due to policies that increase regulatory acceptance and recent increases in interest rates. Under IFRS17, insurance revenue is heavily influenced by the Contractual Service Margin(CSM). Both life and non-life insurance companies have already changed their sales strategies to focus on long-term protection-type products with high CSMs several years ago. Under IFRS17, securing CSM becomes a strategy to increase the profitability of insurance companies, so it is likely that the business policy centered on long-term protection-type products will continue. Meanwhile, as assumptions have a significant impact on insurance companies’ profits and losses, stakeholders such as regulators, investors, and consumers are expected to demand strict verification of assumptions. Additionally, with the introduction of IFRS17, a new solvency system called K-ICS will also be introduced, so it is necessary to manage the solvency ratio using contingent capital securities, derivatives, and other financial instruments. Most insurance companies have revealed plans to apply CSM as an evaluation indicator, and as a result, the concentration on high-profit products is expected to increase, intensifying competition among insurance companies. If not only insurance risk but also market risks such as interest rates are considered in using ‘adjusted CSM’ as an evaluation indicator, risk-based value management is expected to be achieved to some extent. The new insurance accounting system based on market value evaluation may amplify the volatility of the capital and performance of the insurance industry. Therefore, continuous monitoring, management, and improvement of the system are necessary for stable establishment of the system and improvement of the market regulation function.