|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:
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