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RMORSA readiness and ERM effectiveness

3:53 PM | Posted by |
In September 2011, the National Association of Insurance
Commissioners (NAIC) unanimously adopted the Risk
Management and Own Risk and Solvency Assessment
(RMORSA) Model Act, with an effective date of January
1, 2015. This signifies a fundamental shift in the
regulatory scrutiny of the insurance industry’s enterprise
risk management (ERM) practices, and requires an
“ORSA Summary Report” to be filed with the insurance
commissioner in the lead state of domicile in 2015.
 
The findings of a recent survey
by PwC on the US
insurance industry’s Enterprise Risk Management and
ORSA readiness indicate that significant investment in
resources and organizational commitment are necessary
for many insurers to facilitate filing a complete and
comprehensive report in 2015.
Perceptions of RMORSA preparedness
 
35 %   of companies indicated they do not have
a fully operational risk appetite with
tolerances linked to business strategy.
  
38 % of company boards are reported to either
not be engaged or only passively engaged in
risk management.

82 % And, yet, 82% of respondents believe
existing ERM processes are largely or
already adequate for the RMORSA.
 
A potentially significant gap appears
to exist between the perception of
preparedness for the RMORSA and the
actual completeness of the underlying
risk management framework.