Over the past few years, international supervisors, U.S. state regulators, and major rating agencies such as Standard & Poor's and A.M. Best have adopted regulatory and rating review processes to help ensure that insurers build strong enterprise risk management (ERM) frameworks to help evaluate, govern, and manage risks of loss company-wide. 

This year, the National Association of Insurance Commissioners (NAIC) is finalizing a more formalized reporting requirement to monitor risk and solvency levels of the largest insurance companies, going above and beyond the recent state regulatory push towards risk-based financial examinations. The NAIC's Own Risk and Solvency Assessment Proposal (ORSA) is defined as a set of processes used for decision-making and strategic analysis, based on how the company manages and controls its risks.

The goal of performing an ORSA is to analyze, in a continuous and proactive way, the overall solvency and capital requirements of an insurance company in light of the specific business, operational, and underwriting risks uniquely faced by that company. However, an ORSA exercise is not just about capital. It marks a change in behavior, signaling a fundamental shift towards a comprehensive enterprise risk management (ERM) culture. Ultimately, regulators are moving towards supervisory rules and standards requiring insurance companies to integrate risk and risk management in all aspects of corporate day-to-day decision-making.