With the National Association of Insurance Commissioners' Own Risk and Solvency Assessment (ORSA) regulation bearing down on insurers, the IASA offered a super session, plus a track of technical sessions, on complying with the new enterprise risk-reporting mandate, to keep its members informed and updated.

“We had it as a super session two years ago, and now a lot [of the regulation] has been implemented” by IASA members, particularly large companies, explains Dotti Augustine, chair of IASA's Accounting, Risk Management and Finance Committee. Given the impact of the regulation, it's important to give IASA members a forum to draw from one another's knowledge and experience, says Augustine, director of client services at Aon Benfield.

“In the insurance industry, companies are very good at helping clients manage risks, but doing it for themselves is a very different task,” observes consultant Mary Peter, who will moderate and speak at the super session. Peter is director, enterprise risk management, at Eide Bailly LLP.

Linda Conrad, director of strategic business risk management at Zurich Insurance Co. Ltd., also is due to sit on the super session panel. Her plan is to share the approach that Zurich has taken recently to develop its ORSA report. “Zurich has all the pieces it needs to write its report,” Peter asserts.

The NAIC in March finalized guidelines for the ORSA report, which large and mid-sized insurers must deliver by Jan. 1, 2015. Insurers must comply with the regulation if they meet certain annual direct written premium and unaffiliated assumed premium thresholds: $500 million or more for individual insurers and $1 billion or more for insurer groups.

At this point, insurers “need a plan” for setting out how different risks impact their organizations across departmental and divisional lines, says Peter.

Larger insurers like Zurich likely have committed more resources and time to developing their ORSA reports than have mid-sized companies, “so a mid-sized market can learn from larger companies if its own plan doesn't yet meet the ORSA requirements,” she notes.

Still, some large companies have yet to fully resolve how to comply with the new NAIC rule. This super session should be instructive to them as well, says Peter. The super session will survey the issues insurers face in developing their individual reports, while each of the ARF Committee's six technical sessions on the regulation will dive deeper into the nitty gritty details of the new regulation.

Collectively, these sessions may prove valuable to insurers that still are deciding how to structure their reports, since templates may not be practical given insurers' varying risk profiles.

“Insurance companies are very diverse,” Peter explains. Some are single-line companies operating in one state, while others write multiple lines across a region or nationally. Some are life/health insurers, and others are property/casualty companies. Many are for-profit companies, but some are non-profits. In addition, insurers distribute their products and services in various ways.

“So how they manage those risks,” she says, “would vary considerably.”

To stay a step ahead of new regulations, insurers need to fully understand the past and present while analyzing the future, she asserts. “You just can't look in your rearview mirror. You have to have a strategic plan that considers emerging risks and how fast they're coming — whether you want to put on the brakes or speed up because you're comfortable managing your risks” and the opportunities they provide. “It's like looking through the windshield of your car.”

Moreover, enterprise risk has to be analyzed both quantitatively and qualitatively, Peter notes. Consider reputation risk. “It's very difficult to quantify, but you know when it happens. If controls are in place to respond, you may be more nimble to respond to those issues and avoid a loss.”

What's more, how a company responds to the new regulatory environment might ultimately provide it with a competitive edge.

Special Reports /

Insurers Urged to Get Ready for ORSA

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