The financial regulatory authority announced on September 11, 2026 a proposed amendment to the Insurance Business Supervisory Regulations (the “Amended IBSR”) intended to promote sound management of insurance companies and strengthen consumer protection. The Amended IBSR includes, among other things, the introduction of an Actuarial Assumptions Report, the establishment of a Duration Gap indicator, and the implementation of an operational risk assessment for General Agencies (GAs). The key provisions are as follows:
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Strengthened Management of Actuarial Assumptions |
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Under the Amended IBSR, insurers will be required to prepare an Actuarial Assumptions Report which would include: (i) the rationale and methodology used to determine actuarial assumptions, (ii) major changes and validation results, and (iii) cash flow modeling and internal controls matters relating to actuarial assumptions, which constitute key information for the valuation of insurance liabilities. Insurers will be required to submit such Actuarial Assumptions Report to the Financial Supervisory Service, along with their annual business report.
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In addition, insurers must establish internal control standards governing the determination and modification of actuarial assumptions. If actuarial assumptions are revised during a fiscal year, the reasons for the change, its substance, and the resulting financial impact must be reported to the risk committee of the insurer’s board of directors.
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Enhancement of Risk Assessment and Application System (“RAAS”) |
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A new “Duration Gap” indicator will be introduced as a quantitative indicator for interest rate risk under the RAAS. Duration and Duration Gap will also be added to the required public disclosure items.
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A “GA operational risk assessment system” will be introduced to enable systematic assessment and management of operational risks associated with GAs.
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A new item assessing the “adequacy of an insurer’s management of GA operational risks” will be added to the non-quantitative portion of the RAAS assessment. |
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Based on quantitative indicators such as a GA channel’s incomplete sales ratio and policy retention rate, the operational risk associated with each insurer’s GA channel will be rated on a 1 to 5 grade scale. Where the assessment result is poor, a penalty will be applied in calculating the insurer’s K-ICS ratio. |
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Other Matters |
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Under the Amended IBSR, a new rule will limit an insurer’s aggregate exposure to real estate project financing to 20% of its total assets.
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The calculating of the amount to be set aside as catastrophe risk reserve will be revised to use the relevant fiscal year’s “premiums subject to reserve requirements” as the basis for calculation.
Comments on the Amended IBSR may be submitted until September 21, 2026. The Amended IBSR is scheduled to take effect on January 1, 2027, following review by the Regulatory Reform Committee and a resolution by the Financial Services Commission (the requirement to prepare an Actuarial Assumptions Report will take effect earlier, on December 31, 2026).
