The NAIC Solvency Modernization Initiative taskforce's adoption of the U.S. Own Risk and Solvency Assessment (ORSA) proposal in Washington, D.C. a fortnight ago has left us with a number of big questions. One of the biggest and most difficult is: What's next?
Make no mistake; the ORSA is an evolutionary culture shift for the NAIC. It is a significant new regulatory proposal for the U.S.—and one that has the potential to impact insurance supervision. The perspectives that a well-executed ORSA can provide will be valuable to regulators, who will need to make available the time and resources to fully understand them. For insurers, the ORSA filing could provide further opportunity to engage regulators and demonstrate the utility of good capital management.
There appears to be a sincere desire among both the industry and regulators for the U.S. ORSA to work. The proposals are the product of the NAIC's exhaustive yet transparent policymaking process—and have been a genuinely collaborative effort between insurers and supervisors. The Chief Risk Officers Council has invested significant time in working with the NAIC, and other industry groups and individual firms have provided much constructive comment. This is one reason why the proposal has so much momentum at the moment—and is a good reason why the U.S. ORSA is likely to make a difference in practice.
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