From the December 2012 issue of American Agent & Broker •Subscribe!

Clean Out the Regulatory Attic

ORSA represents a shift in both the substance and timing of a regulatory filing.

By now you have probably heard about the pending new Own Risk and Solvency Assessment (ORSA) that’s making its way through the National Assn. of Insurance Commissioners’ process.

ORSA  is a departure from the traditional box-checking, number-crunching approach to most regulatory requirements. It is an enterprise risk management approach to regulation that captures information that companies are already producing for internal purposes. This new filing will be required only for companies with more than $500 million in direct written premium.

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

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

NAMIC and others in the property-casualty industry have been advocating some key provisions  in the current model: the compliance threshold, and ensuring confidentiality protections given the proprietary nature of most ORSA information. We were successful in accomplishing those objectives, and while we’re not applauding the creation of a new regulatory requirement for our members, stopping this proposal has not been an option.

ORSA provides us with an opportunity as well. Assuming states enact the model over the next year or two, the first reports will be due in 2015. Anticipating that action, we now have leverage to make a case for doing away with some of the old requirements of questionable value.

One of the regulators at the recent NAIC meeting in Atlanta called ORSA a "regulatory game changer," which  it may well be. NAMIC aims to hold regulators to that standard. Part of the game that has to change is the silly "ticking and tying" too often associated with regulatory requirements.

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

Comments

Resource Center

View All »

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.