The Lloyd’s Market Association (LMA) has issued a new guide on the Own Risk & Solvency Assessment (ORSA) reports, which insurance companies are required to produce every year.
Created by chief risk officers (CROs) for board members and regulators, the ORSA reports are insurers’ own assessment of current and future risks, including a judgement about their ability to respond to potential capital needs.
“We are supportive of the concept of ORSA. It has created an opportunity to promote a ‘risk and capital culture’ and has enhanced the role of
risk management within insurers,” said LMA finance and risk director Ken Curtis.
“It is however critical that it remains each insurer’s ‘own’ assessment of their risk profile and capital requirements, tailored for their business and their board. It is essential to keep the ‘O’ in ORSA,” Curtis added.
Initially formulated as part of
Solvency II, the ORSA approach has been adopted by a number of other non-EU regulators across the world.
According to the LMA, the regulator’s interest in ORSA has increased along with the appetite for the inclusion of greater amounts of data.
However, the level of information demanded by the regulator contrasts with the requirements of board members, who might already have seen relevant data sets and often prefer distilled key messages to focus their decisions.
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