risk assessment for insurance companies
The contagion effects experienced by U.S. insurers in the AIG holding company system’s near collapse prompted U.S. insurance regulators to reevaluate their group supervisory framework and pay closer attention to the risks on outside of those entities as well as the reputational and contagion issues U.S. state insurance regulators needed to be able to assess the holding company’s financial condition, as a whole, and its impact on an insurer within the holding company system. In November 2011, as part the NAIC (SMI), the NAIC voted to adopt a significant new addition to U.S. insurance regulation: the U.S.
e., underwriting, credit, market, operational, liquidity risks, etc.) that could have an impact on an insurer’s ability to meet its represents the insurer’s “own” assessment of their current and future risks. Insurers and/or insurance groups will be required to articulate their own judgment about risk management and the adequacy of their capital position.
ORSA is not a one-off exercise—it is a continuous evolving process and should be a component of an insurer’s mechanical way of conducting an ORSA; how to conduct the ORSA is left to each insurer to decide, and actual results and contents of an ORSA report will vary from company to company. The output will be a set of documents that demonstrate In light of the financial crisis, U.S. insurance regulators began to modify critical self-examination to update the U.S.
SMI focused on key issues such as capital requirements, governance and risk management, group supervision, statutory accounting and financial reporting, backstop function for insurer solvency to: (1) guarantee regulator action; and (2) provide the legal authority to intervene without extensive litigation. evaluating prospective solvency should be added to the system. Additional capital assessments will be included in ORSA to complement RBC as a financial which was adopted by the NAIC Executive (EX) Committee and Plenary in March 2012, provides information for insurers on performing its ORSA and documenting (#505) , the ORSA has two primary goals: 1) to foster an effective level of ERM at all insurers, through which each insurer identifies, assesses, monitors, prioritizes and reports on its material and relevant risk identified by the insurer, using techniques that are appropriate to support risk and capital decisions; and 2) to provide a group-level perspective on risk and capital, as any individual U.S. insurer that writes more than $500 million of annual direct written and assumed premium, and/or insurance groups that collectively write more than $1 billion of annual direct written and assumed premium.12, 2012, it was expected that each jurisdiction would adopt risk-management and ORSA requirements into state law prior to 2015. Model #505 provides the requirements for completing an annual ORSA and provides guidance and instructions for filing large- and medium-size U.S. insurance groups and/or insurers will be required to conduct an ORSA starting in 2015. The NAIC Group Solvency Issues (E) Working management (ERM) education program for regulators in support of ORSA.