Early this year, PwC issued the results of its 2012 U.S. Insurance ERM & ORSA Readiness Survey, highlighting significant gaps between insurers' perceptions of their readiness for the National Association of Insurance Commissioners' (NAIC) adoption of the Risk Management and Own Risk Solvency Assessment Model Act (RMORSA), and their actual, day-to-day enterprise risk management (ERM) practices. The PwC report emphasizes that despite some progress in adopting ERM, most insurers still "need to make significant investments in resources and organizational commitment in order to operationalize the process and facilitate filing a complete and comprehensive report on time."

The Increasing Need for ERM

Over the past few years, international, federal and state regulators, and major rating agencies such as Standard & Poor's and A.M. Best, have adopted regulatory and rating review processes to help insurers build strong ERM frameworks to help evaluate, govern, and manage risks of loss company-wide. Regulators and rating agencies want to ensure that companies are setting their capital and strategic goals appropriately in line with each insurer's unique portfolio of risks and controls.