Preparing for the US ORSA: Considerations in advance of the new US insurance regulatory requirement

May 2011
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Preparing for the US ORSA: Considerations in advance of the new US insurance regulatory requirement

At a glance

This paper describes the key steps that insurers can take today to influence the scope of the requirement and ensure a smooth transition to regulatory reporting of ORSAs.

Among the most significant of the NAIC's Solvency Modernization Initiative's (SMI) contemplated changes is a requirement that US insurers routinely conduct an "Own Risk and Solvency Assessment" (ORSA). A US ORSA requirement will satisfy IAIS insurance core principles (ICP) and enable US regulators to develop a deeper understanding of an insurer's internal risk management practices.

US ORSAs will allow regulators to perform routine examinations of prospective solvency and form an enhanced view of on an insurer's ability to withstand financial stress. In addition, the information an ORSA contains will complement the information coming out of the risk-focused examination process   a current requirement of US insurance regulators.

While the US ORSA requirement is still in development, the NAIC expects it will come into effect by the end of 2012. This paper describes the key steps that insurers can take today to influence the scope of the requirement and ensure a smooth transition to regulatory reporting of ORSAs.