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Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20130&cosponId=12652
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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted: April 30, 2013 01:27 PM
From: Senator Donald C. White
To: All Senate members
Subject: ORSA (Own Risk and Solvency Assessment)
 
In the near future, I plan to introduce legislation to provide for the maintenance of a risk management framework and completion of an Own Risk and Solvency Assessment (ORSA). The ORSA will assess, in a continuous and prospective way, the overall solvency needs related to the specific risk profile of an insurance company.

The purpose of an ORSA is to ensure the company has developed a risk management policy that clearly identifies material risks and the amount of material risks the company is exposed to. The ORSA is essentially an internal assessment of the risks associated with an insurer’s current business plan, and the sufficiency of capital resources to support those risks. The ORSA has two primary goals:
  • To foster an effective level of enterprise risk management at all insurers, through which each insurer identifies and quantifies its material and relevant risks, using techniques that are appropriate to the nature, scale and complexity of the insurer’s risks, in a manner that is adequate to support risk and capital decisions; and
  • To provide a group-level perspective on risk and capital, as a supplement to the existing legal entity view.

The National Association of Insurance Commissioners (NAIC) has stated that ORSA will be critical to US regulators meeting the requirements of the International Monetary Fund’s (IMF’s) Financial Sector Assessment Program (FSAP), which reviews the sufficiency of regulatory supervision of financial markets across the world. The ORSA is a critical component of the NAIC’s Solvency Modernization Initiative.

This legislation is based on a model law developed by the NAIC and included in the NAIC’s Financial Regulation Standards and Accreditation Program. In other words, Pennsylvania must adopt a law substantially similar to the NAIC model in order for the Department to maintain its status as an accredited regulator with the NAIC. The law must be effective on or before January 2015.










Introduced as SB969