By now you have probably heard about the pending newOwn Risk and Solvency Assessment (ORSA) that'smaking its way through the National Assn. of InsuranceCommissioners' process.

ORSA  is a departure from the traditional box-checking,number-crunching approach to most regulatory requirements. It is anenterprise risk management approach to regulation that capturesinformation that companies are already producing for internalpurposes. This new filing will be required only for companies withmore than $500 million in direct written premium.

ORSA represents a shift in both the substance and timing of aregulatory filing. Where most information now required is backwardlooking—financial results and annual statement information fromlast year—ORSA will require risk models, business plan informationand growth initiatives for the coming year.

Earlier this year, NAIC conducted a pilot project where 13anonymous insurance companies voluntarily provided summary reports.Only eight submitted reports deemed sufficiently complete, animpending ORSA requirement (although five of these reports includedsome data fields that were redacted).

NAMIC and others in the property-casualty industry have beenadvocating some key provisions  in the current model: thecompliance threshold, and ensuring confidentiality protectionsgiven the proprietary nature of most ORSA information. We weresuccessful in accomplishing those objectives, and while we're notapplauding the creation of a new regulatory requirement for ourmembers, stopping this proposal has not been an option.

ORSA provides us with an opportunity as well. Assuming statesenact the model over the next year or two, the first reports willbe due in 2015. Anticipating that action, we now have leverage tomake a case for doing away with some of the old requirements ofquestionable value.

One of the regulators at the recent NAIC meeting in Atlantacalled ORSA a “regulatory game changer,” which  it maywell be. NAMIC aims to hold regulators to that standard. Part ofthe game that has to change is the silly “ticking and tying” toooften associated with regulatory requirements.

In order to survive, state regulation must be rational,efficient and focused. It may sound naïve to expect anythingdifferent from the bureaucracy, but NAMIC will work to make thecase—and we'll use ORSA as an opportunity to change the game.