EIOPA publishes the outcome of the Public Consultation on the ORSA

The European Insurance and Occupational Pensions Authority (EIOPA)
published today its Final Report on draft Guidelines for Own Risk and
Solvency Assessment (ORSA).

The report underlines the purposes of the ORSA and provides additional
details on how the ORSA is to be interpreted. Undertakings are expected to
have the necessary competence and expertise to find fit-for-purpose
solutions for the practical implementation of the ORSA.

EIOPA points out that one key feature of the ORSA is proportionality.
Insurers should develop their own ORSA processes that are tailored to fit
into their organisational structure and risk management system with
appropriate and adequate techniques to assess the company's overall
solvency needs.

The undertaking's administrative, management and supervisory body (AMSB)
needs to play an active role in the ORSA, particularly by steering on how
the assessment is to be performed and by challenging its results.

Undertakings should express the overall solvency needs in quantitative and
qualitative terms and complement the quantification by a qualitative
description of the risks. Insurers will be required to submit to the NSAs
a forward-looking assessment of their overall solvency needs indicating
multi-year tendencies and developments.

Gabriel Bernardino, Chairman of EIOPA, said: "With this report EIOPA
highlights its expectations in relation to the implementation of the ORSA
by insurance undertakings. The ORSA should allow insurers to have a
complete and holistic risk understanding and should connect business
strategy and capital planning. The ORSA is a top-down process owned by the
undertaking's Board. In this sense it should be an essential tool to
help boards in their core responsibility not to take on more risks than
the capital base allows for. The financial system needs a cultural change
and I believe that the ORSA will become a key element of such a change in
the insurance sector".

EIOPA strongly encourages the industry to use the current report in their
early implementation of the ORSA.

The text of EIOPA Final Report on Public Consultation No. 11/008 on the
proposal for Guidelines on Own Risk and Solvency Assessment can be viewed
online. (Link:
https://eiopa.europa.eu/consultations/consultation-papers/2011-closed-consultations/november-2011/solvency-ii-consultation-paper-on-the-proposal-for-guidelines-on-own-risk-and-solvency-assessment/index.html
)


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