After much anticipation, Own Risk and Solvency Assessment (ORSA) initiatives are now underway worldwide—taking effect in 2014 in Canada and 2015 in the United States, with similar initiatives approaching in Europe and other global insurance markets. Executive SummaryAn outline of ORSA requirements mapped against an inventory of current risk management practices is a first step P/C carriers can take to simplify what might otherwise seem like a daunting compliance exercise, according to two risk experts at Towers Watson, who give some practical hints for developing ORSA reports and updating capital modeling capabilities.
ORSA regulations, such as those being introduced by the National Association of Insurance Commissioners (NAIC) in the U.S. and the Office of the Superintendent of Financial Institutions (OSFI) in Canada, require insurers to perform a self-assessment of their risk management frameworks and solvency positions. More than simply a point-in-time exercise, these assessments must also consider how risk exposures and risk management capabilities will evolve over the future business-planning horizon. Insurers must then summarize the results of this assessment in a report to be made available for the board of directors and insurance regulators.