The insurance industry was one of the first economic sectors to be regulated – and it continues to be subject to close scrutiny by public authorities throughout the world. For the last 30 years, businesses in this industry have been bombarded with new and increasingly diverse regulations, all designed to ensure that insurers are financially stable. But in recent years, insurance has become far more complex and sophisticated. Many of the earlier regulations put in place can’t address new industry complexities.
For this reason, insurance companies around the world are facing a host of new regulations that go beyond simple compliance. At the heart of many of these new regulations is the requirement that insurance companies perform an Own Risk and Solvency Assessment (ORSA) – a self-assessment of their current and future risk.
ORSA is a relatively new concept aimed at enhancing insurer awareness and understanding significant risks and interdependencies, as well as the impact of these risks on each company’s available capital and its own view of capital needs.
Many industry leaders consider Solvency II and ORSA to be a “game-changer” for the insurance industry, as these regulations represent an opportunity for insurance companies to demonstrate that they understand their own risks and liabilities. However, for many insurers, implementing these initiatives will be a major challenge. To better understand ORSA and help overcome these challenges download the white paper “ORSA: The New Kid in Town”.
ORSA and Solvency II signals a fundamental shift towards an enterprise risk management culture. However, these regulations demand a more comprehensive approach to risk management. Fortunately SAS provides insurers with an integrated framework to help support the quantitative elements of ORSA. SAS was recently recognized by analyst firm Chartis Research as a category leader in Chartis’ RiskTech Quadrant® for Solvency II Technology Solutions.
The regulation of the insurance industry has long been regarded as an unnecessary hindrance. Nevertheless, those insurers who view ORSA and Solvency II as just another regulatory requirement will be at a competitive disadvantage to those who embrace the legislation to improve their business and long term future.