Korea Insurance Research Institute Proposes Solvency Reforms for Productive Finance

Korea Insurance Research Institute held a seminar on the 9th titled 'Role and Tasks of Insurance Industry in Productive Finance Era.' Researcher Choi Woo-seok presented proposals to reform the solvency system, arguing that current regulations create capital volatility when insurance companies invest in high-tech, venture, and infrastructure sectors. The reform aims to position the insurance industry as a long-term capital supplier for productive finance while managing regulatory burden on solvency ratios.

Researcher Proposes Solvency System Reforms for Productive Finance

Choi Woo-seok stated that insurance companies have strengths in patient capital investments required for high-tech, venture, and infrastructure sectors due to their long-term insurance liabilities, but noted that productive assets increase risk and lower solvency ratios. He proposed allowing matching adjustments for floating-rate assets and relaxing cash flow mismatching requirements. Choi recommended reducing shock levels proportional to government investment subsidies in policy programs, and expanding the long-term equity holding exemption to include unlisted stocks and funds. He added that qualified venture investments should apply developed market listed equity shock levels, and non-traditional infrastructure such as renewable energy and AI facilities should be recognized as eligible infrastructure.

Insurance Industry Must Develop Structural Capabilities Alongside Regulatory Changes

Choi emphasized that the insurance industry must prepare structural foundations including efficient risk management through derivatives, development and sale of products that match productive assets easily, and advancement of asset management capabilities. Korea Insurance Research Institute President Kim Heon-soo stated that while the insurance industry's role as a long-term investor in the real economy has grown, investment in relatively risky productive sectors can increase solvency management burden, adding that this transition is both a burden and an opportunity to open new paths for the insurance industry.

FAQ

What did Korea Insurance Research Institute announce on the 9th? Korea Insurance Research Institute held a seminar titled 'Role and Tasks of Insurance Industry in Productive Finance Era' where researcher Choi Woo-seok presented proposals to reform the solvency system for productive finance investments.

Why does the insurance industry need solvency system reforms? Choi Woo-seok explained that productive assets such as high-tech, venture, and infrastructure investments increase capital volatility and lower solvency ratios under current regulations, creating barriers for insurance companies to act as long-term capital suppliers despite their natural advantages in patient capital investments.