What is the Own Risk and Solvency Assessment (ORSA) Compliance?
The NAIC Risk Management and Own Risk and Solvency Assessment Model Act went into effect on Jan. 1, 2015. This Model Act stipulates that large and medium size U.S. insurers and insurance groups are required to regularly perform an Own Risk Solvency Assessment and file a confidential ORSA Summary Report of the assessment with the regulator of each insurance company upon request, and with the lead state regulator for each insurance group whether or not any request is made.
An ORSA is an internal process undertaken by an insurer or insurance group to assess the adequacy of its risk management and current and prospective solvency positions under normal and severe stress scenarios. An Own Risk Solvency Assessment will require insurers to analyze all reasonably foreseeable and relevant material risks (i.e., underwriting, credit, market, operational, liquidity risks, etc.) that could have an impact on an insurer’s ability to meet its policyholder obligations.
According to the NAIC, “ORSA is not a one-off exercise-it is a continuous evolving process and should be a component of an insurer’s enterprise risk management (ERM) framework.”
What Are the Benefits of Integrating ORSA Compliance Software with Your ERM Program?
ORSA risk management has five key components: Risk Culture and Governance, Risk Identification and Prioritization, Risk Appetite and Tolerances, Risk Management and Controls, Risk Reporting and Communication. As you can see, the scope of ORSA compliance is wide, which means having one centralized, standardized ERM framework will help you break down each of these components into actionable pieces with accountability.
For instance, as defined by the NAIC, Risk Culture and Governance provides defined roles, responsibilities, and accountability in risk-based decision making. In effect, the principle builds off of a 2010 SEC mandate requiring corporate boards to document their role overseeing enterprise risk. ERM software like LogicManager is designed to clearly define the role each level of the organization plays in achieving ORSA compliance, and to facilitate communication between these groups.
With LogicManager, organizations can create a unified risk culture, identify risks across silos, prioritize their resources according to criticality, define risk tolerances, document controls, and prove ORSA compliance with pre-built and custom reports. In this way, an ERM framework removes the duplicate effort and wasted resources that could result from decentralizing Own Risk Solvency Assessment activities.
Achieve ORSA Compliance with LogicManager
LogicManager empowers insurance companies to achieve ORSA compliance by implementing a robust, unified ERM framework alongside unlimited training and support.
Pre-Built Own Risk and Solvency Assessments: Leverage LogicManager’s pre-built risk assessments to analyze current and future material risks across the enterprise.
ORSA Summary Reports: LogicManager’s business-intelligence reporting engine empowers your business to collect information from the operational level to the executive level, and aggregate data in a digestible format.
Risk Appetites and Tolerances: Set appetite and tolerance levels within LogicManager. Collect metrics to monitor whether decisions carry acceptable or unacceptable amounts of risk.
Taxonomy Technology: Create links between the risks identified in pre-built Own Risk and Solvency they were designed to mitigate to monitor the effectiveness of each mitigation activity with our taxonomy.
Automated Workflows: Set recurring e-mail notifications a certain amount of days before the due date for upcoming Own Risk Solvency Assessments to engage the appropriate users with the tool and ensure they complete their tasks.
Get this solution.
If you’re already a LogicManager customer, you can contact your business analysts to activate this plugin! If you’re new to LogicManager, you can request a personalized demo to see our ORSA compliance solution in action.
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