During the past 15 months, as part of the NAIC's Solvency Modernization Initiative (SMI), the NAIC has been developing requirements for all insurance companies regulated in the U.S. to conduct an Own Risk and Solvency Assessment (ORSA), and report their enterprise risk management (ERM) practices and related findings to their respective regulators.

The plan is moving forward. At the fall NAIC meeting in early November, an ORSA Guidance Manual (rev. Aug. 15, 2011), outlining proposed risk assessment and reporting guidelines was submitted by the Group Solvency Task Force to the Financial Condition (E) Committee. Further industry comments are expected to be gathered through this distribution. With the progress being made, it is likely that a final reporting proposal will be adopted by the NAIC in some form in 2012. With so much activity happening now, it's helpful to gain a high-level overview of this significant proposed regulation and the issues likely to be fleshed out next year.

What is an ORSA?