The NAIC's Solvency Modernization Initiative (SMI), including the preliminary adoption of the US Own Risk & Solvency Assessment (ORSA), will present insurers with a number of new regulatory requirements. For insurers with group operations in Europe, Solvency II is also driving change, and evolving Federal and macro-prudential supervisory requirements also will affect many insurers. These may be challenging for insurers that have not implemented effective Enterprise Risk Management (ERM) and risk reporting frameworks.
Forward thinking insurers can use these new regulatory requirements as a catalyst for change within their business, to drive improved financial performance, and more effective risk and capital management. In turn, this can help lead to potential improvements in both credit and associated ERM ratings.
PwC has extensive experience with NAIC, statutory, and Federal regulatory matters, and regularly helps insurers understand and address them.
- Understanding of different regulatory initiatives and how they may impact you.
- Need to assess, manage and report the material risks facing your business (particularly underwriting, reserving, credit/counterparty, investment and operational risks).
- Inadequate expertise to model the business and its material risks, under both normal and stressed environments, and deliver a robust assessment of capital requirements.
- Development of required actuarial and risk functions and subsequently exercise good governance over them.
- Need to significantly upgrade management information and develop a suite of key risk indicators.
How we can help
- Identification of acceptable risks, and for those that cannot be mitigated, the amount of capital required to support the business.
- Connect risk assessment, risk mitigation, capital requirements, management information and the expectations of shareholders and policyholders, so that they can be presented in a consistent, efficient and effective framework.
- Comfort that risks are being monitored and controlled.
- Understanding of the appropriate balance of interests between policyholders and shareholders.
- A framework to monitor and project the solvency position over the business planning period and define trigger points for management actions.
- Understanding of what actuaries and risk managers can and cannot do, and how to maintain robust governance over them.
- Identifying, measuring, modeling and monitoring insurance, market, credit/counterparty, operational, group/contagion, and liquidity risks.
- Training senior management so that they understand their obligations and potential issues.
- Developing your US ORSA process and report.
- Developing the methodology for calculating economic or regulatory capital requirements.
- Developing or upgrading management information/metrics and key risk indicators.
- Assessment or benchmarking of your actuarial, risk and capital modeling functions.
- Advising on your regulatory and ratings agency communications process.
- Regulatory examination support.
- Independent advice on, or assurance over, the above, including validation of capital models.