Because equity-type capital generally has a higher cost than subordinated or other non-core instruments, the requirement may increase funding costs for some insurers, especially those that have relied more heavily on hybrid capital to support growth or manage K-ICS positions. Insurers that fall below the 50% core capital ratio will be subject to corrective measures by the regulator. The FSC has indicated that a grace period will apply, giving companies time to adjust capital plans, review asset-liability management, and consider product or portfolio changes where needed. For regional groups, the reform adds another point of comparison as Asian supervisors continue to develop and refine risk-based capital frameworks.
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