Risk and capital management
Effective risk management has always been important for insurers, but now it is a necessity. The NAIC's US ORSA (Own Risk and Solvency Assessment) requirement is expected to come into effect in 2013. To complete the ORSA, a company will need to conduct a detailed appraisal of its strategic risk management.
One of the biggest challenges in successfully implementing effective risk and capital management practices is realizing the cultural and behavioral changes that make them business-as-usual. This takes time and planning, and is almost impossible to "fast-track" in time to meet a regulatory review schedule. Accordingly, now is the time to start devoting time and attention to this underlying assessment, improve perspectives on ERM practices, and make any necessary improvements to your risk framework before your competitors do.
Moreover, US regulators may not wait for formal implementation of the filing requirement to ask insurers about risk management and the ORSA. As a result, the de facto implementation date is when you next speak to your regulator about your examination. The level of comfort that you can provide on your risk management capability should have an impact on the scope, depth and timing of both the risk-focused analysis and examination procedures to which you are subject. Therefore, having an effective ERM process in place and explaining it well could make a material difference to your ongoing regulation.
For more than 25 years, PwC has advised insurers on assessing, monitoring, and managing risks from all sources, and has extensive practical experience helping insurers develop and improve their risk management functions. We provide comprehensive services in all key risk areas, including actuarial, financial, operational, and regulatory and compliance, as well as across all key risk management framework components, including governance and organization, measurement and analytics, reporting, and systems and data infrastructure.