The Own Risk and Solvency Assessment (ORSA) is quickly becoming a global regulatory requirement for insurance undertakings. It is one of the key elements of enterprise risk management (ERM). Numerous insurance regulators around the world are introducing ORSA requirements.
Many of the global developments stem from the International Association of Insurance Supervisors (IAIS), which requires an ORSA as part of Insurance Core Principle 16 (ICP16) on ERM, which was adopted in October 2010. The inclusion of an ORSA requirement within the ICPs has resulted in an effective worldwide requirement for an ORSA, albeit one that can vary in certain respects from country to country.
This paper compares and contrasts the IAIS requirements with the requirements applying in Europe (through Solvency II), in the US and in Australia. It also summarises the ORSA requirements applying in a number of other territories, looks at a number of common challenges facing insurers when embedding an ORSA into their organisation, and also covers potential solutions to some of these challenges.