The Risk Management and Own Risk Solvency Assessment Model Act (RMORSA), which is in the process of being implemented in state law, requires insurers to manage a comprehensive enterprise risk management framework that is embedded within company operations by January 2015.

Setting the risk strategy and achieving a risk-aware culture throughout the organization, which are crucial to a comprehensive and effective ERM program, could take a couple of years. However, some lead state regulators are already examining insurers' ORSAs or similar documentation, as part of the risk-focused examination process. Furthermore, states that have adopted the newly revised NAIC Model Holding Company Act will look for more enhanced annual reporting of ERM practices, through the mandated filing of the Form F. This process will begin in 2014 in most states.

While the RMORSA deadline is quickly approaching, almost 40 percent of insurance company boards are not engaged, or only passively engaged, in risk management, according to PwC's recent “2012 U.S. Insurance ERM & ORSA Readiness Survey.” In addition, only 65 percent of companies indicated they have a risk appetite statement that reflects tolerance, strategy and financial goals.. Insurers may be underestimating the amount of work it will take to meet the RMORSA requirements.