Eagerly anticipated, a Risk Management and Own Risk and Solvency Assessment Model Act (RMORSA) was finally adopted on Sept. 12 by the National Association of Insurance Commissioners (NAIC). Under the Model Act, which still needs to be enacted into law by individual states companies, companies that meet certain financial thresholds will be required to assess the adequacy of their risk management programs, and their current, and likely future, solvency position. Formal reports summarizing the company's risk governance program, and a risk-based solvency assessment will generally be provided to regulators at least annually. However, exact filing dates and frequency may depend on a myriad of factors, such as the nature and complexity of a company's risks, financial position, as well as the economic environment considerations.

As part of the development of this Model Act, a companion Guidance Manual was drafted, with some direction to insurers on performing its analysis and presenting its findings in a formal report. The Manual itself underwent several level approvals through the past two years. This year, the NAIC created an ORSA Feedback Pilot Project in order for regulators to be able to provide some high-level feedback to the industry on the reporting requirements prior to the effective date of the implementation deadline, now Jan. 1, 2015.

In the Pilot Project, more than a dozen undisclosed insurance companies and groups voluntarily submitted a sample of their ORSA Summary Report for regulatory review under a confidentiality agreement. The reports were delivered to the NAIC early in the summer, and were recently reviewed by the committee over two days. Regulators went through each report one by one for comment and criticism, both to provide feedback to the individual companies submitting the reports, and to address potential wording and substantive issues with the Manual itself.