The Journey to ORSA Begins

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Assessing the Results of the 2015 ORSA Survey from St. John's University and Protiviti

U.S.-based insurance companies have embarked on a new journey as they prepare to produce and file their first Own Risk and Solvency Assessment (ORSA) Summary Report in 2015. The filing of this report marks a key milestone of the Solvency Modernization Initiative. This is the endeavor by the National Association of Insurance Commissioners to modernize the regulatory framework used by state insurance departments to regulate the U.S. insurance industry and enhance the capability of insurance companies to weather economic storms similar to those that battered the broader financial services industry and contributed to the global financial crisis.

St. John's University teamed with Protiviti to conduct a survey of more than 100 industry executives to assess the state of readiness of insurance organizations as they continue with their preparation for their initial ORSA Summary Report, as well as to determine ORSA's impact on different areas of their risk management processes.

Our 5 key findings:

Insurance offerings could change - A majority of respondents indicate that ORSA could affect the nature and types of insurance products sold.
ORSA will change risk oversight, improve ERM, and help with the integration of risk and strategy - The results suggest that half of all insurance companies already recognize the benefits of ORSA in enhancing their ability to manage risk effectively. Among ORSA's key perceived benefits are identifying and managing emerging, financial and strategic risks; improving and formalizing the ERM process; integrating risk management with strategy; measuring and quantifying operational risk; and enhancing risk oversight from the board and senior management.
Many organizations need new controls and policies - A majority of respondents believe ORSA creates the need for new risk management policies and internal controls
More education and training is needed at the board and executive levels - New policies and controls will create opportunities for further education and training related to both ORSA and ERM.
In risk reporting, there's some disagreement between management and the board - Board members may be more skeptical than management about current risk reporting. And management in less than half of all insurance organizations are comfortable that they have examined all possible risk outcomes in stress tests.