South Korea's financial authorities have launched full-fledged preparations for the adoption of a new global accounting regulation on the insurance industry, officials said Wednesday.

The International Accounting Standards Board is expected to set a schedule for the introduction of the International Financial Reporting Standards (IFRS) 4 Phase II during a meeting under way in London.

Under the rule, insurers' liabilities will be assessed on the basis of their market value, instead of book value. It's intended to enable a much "fairer" assessment on insurers' ability to withstand stress and them to have more capital bases and reserves to cover potential losses.

South Korea's insurance sector has requested the extension of a grace period. But the IFRS will likely decide to introduce the IFRS Phase II in January 2017 as planned.

"We are conducting a stress test based on various scenarios as part of efforts to cushion the impact from the introduction of the new accounting rule," an official at the Financial Supervisory Service (FSS) said.

The financial watchdog also plans to improve the local system connected with the oversight of insurers' financial soundness, added the official.

Meeting with the heads of foreign insurers here last month, FSS Gov. Zhin Woong-Seob asked them to take "preemptive" measures to embrace the accounting standards. (Yonhap)