Insurance regulators in the U.S. have begun signing up with their international peers to push a new ERM regulation called “ORSA”—Own Risk and Solvency Assessment, says Dave Ingram, executive vice president of Willis Re.
With ORSA, “you look at your own risk and decide how much surplus you need to protect your solvency, how much capital you need for your risk,” Ingram says.
This is turning the tables on insurers, many of which rely completely on either rating agencies or regulators to determine how much capital they should have, Ingram explains.
“This regulation is saying that board and management need to have their own opinion, not just a pulled-out-of-the-air opinion,” he says.
One of the things ORSA wants to hear, Ingram adds, is how the management and board reflect the risk management of the firm in their thinking about the amount of capital needed, “with the presumption that if you have no risk management, then you need a lot more capital.”
Banking regulators also have put something similar in place, he says.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
