ORSA is more than just another four-letter word. Or acronym, to be precise. For insurers, ORSA is, as Pennsylvania Deputy Insurance Commissioner Steve Johnson said a couple NAIC meetings ago, “a game changer for the insurance industry.”

Executive Summary

Unlike current solvency management, which is largely retrospective, ORSA will allow regulators—and insurers themselves—to look ahead to understand how the carriers will fare in the future, explains the former New York Insurance Department Superintendent.

But what is it? That’s a little more complicated than an elevator speech, since the Own Risk and Solvency Assessment, ORSA, is more than just a report. It is a system that may mean process changes for some insurers, and could mean business-model changes for others.

ORSA is defined as “a confidential internal assessment, appropriate to the nature, scale and complexity of an entity, conducted by that entity of the material and relevant risks associated with the entity’s current business plan, and the sufficiency of capital resources to support those risks,” under the Risk Management and Own Risk and Solvency Assessment Model Act, put together by the National Association of Insurance Commissioners.

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