This Milliman Asia ERM Newsletter highlights the latest developments in enterprise risk management (ERM) across the Asia Pacific region. ERM activity in the insurance sector is accelerating at a rapid pace around the region, especially since a number of regulators have introduced Own Risk and Solvency Assessments (ORSA). Even in countries where ORSA has not been introduced yet, there is an increased interest among risk managers who realize the value that ERM can add to their business through enhanced business resilience.
The newsletter features regulatory and market developments related to ERM from India, Singapore, and Thailand. An article by Neil Cantle on the complexity of risk within businesses is also included.
The European Insurance and Occupational Pensions Authority (EIOPA) published its final report on draft guidelines for Own Risk and Solvency Assessment (ORSA), which “underlines the purposes of the ORSA,” and provides “additional details on how the guidelines are to be interpreted.”
This article by the InsuranceERM (subscription) cites Milliman’s recent Solvency II paper authored by William Coatesworth, John McKenzie, and Neil Cantle where they provide a brief analysis of what the EIOPA’s proposals may mean for companies and Solvency II in general.
Here is an excerpt from their paper:
EIOPA’s final report on the ORSA guidelines sets out the responses and comments raised during the public consultation of the proposed Level 3 ORSA text initiated in November 2011 together with EIOPA’s review and resulting changes to the ORSA requirements.
Consistent with the guidelines set out in the original consultation paper, EIOPA’s report focuses on what the ORSA should achieve rather than how it is to be performed.
While a number of the changes are aimed at providing more clarity around the guidelines, the report does contain several changes that may prove significant to companies. This includes ORSA to be based on a multi-year time horizon rather than a series of one-year horizons.
While these guidelines are still in draft form, and may be subject to further changes in order to reflect future development in the Solvency II Directive as a result of Omnibus II, EIOPA has stress that companies should use these guidelines as the basis for their implementation of the ORSA.
The key message from some national regulators is that firms should now “get on with it” as it is a central part of the new regulation and there will be no more guidance.
Download and read the entire paper here.