New ORSA Requirement Set to Raise Expectations of Risk Management

Beginning in 2015, U.S. insurers operating within the member jurisdictions of the National Association of Insurance Commissioners (NAIC) will be mandated to file an Own Risk and Solvency Assessment (ORSA) Summary Report. ORSA will apply to any individual U.S. insurer that writes more than US$500 million of annual direct written and assumed premiums, and/or insurance groups that collectively write more than US$1 billion of annual direct written and assumed premiums. These thresholds apply to premiums written domestically as well as internationally. Certain states have opted to state that ORSA will be a requirement regardless of premium volume.

The first ORSA filings will serve to represent that a strong enterprise risk management (ERM) function has now become a fundamental regulatory expectation.