What had jumped out at me earlier last week was this article quoting AIA's assistant general counsel which very much framed the US ORSA as a periodic filing requirement with which he had "privacy concerns", voiced that it “should not be compulsively adopted”, and was very much a poor cousin to the existing framework.
This of course flies in the face of the ambitions of the Solvency II ORSA which, while clearly creates a regulatory filing requirement, is intended to demonstrably drive the decision making of the undertaking.
Having had a leaf through the ORSA Manual, a few things jumped out;
- Primary goals are different to the Solvency II version (though both drink from the IAIS ERM ICP cup, the US ORSA stays on message with ERM effectiveness).
- Not compulsory, rather a requirement to be subjected to (subject to minimum premium income limit of $0.5bn as entity, or $1bn as a group)
- Can also be imposed on entities who would be considered on the "ladder of intervention" in Solvency II-speak
- Allows for cross-referencing documents, rather than summarising within an ORSA report (which gives it the look of a Pillar 3 document on Solvency II side)
- Potential option to satisfy US regulatory demands for ORSA by using any which are produced for "non-US jurisdictions" - see, Solvency II preparation is not a waste of energy for any groups with subsidiaries over there after all!
- Great comment that, wishing to use IAIS ICPs to assess the quality of non-US ORSAs, that "one of the NAIC's goals is to avoid creating duplicative regulatory requirements for internationally active insurers".
- Very concise prescriptive summaries of content - agin, they veer towards Pillar 3 requirements over here (SFCR in particular, though I haven't been through today's Pillar 3 consultations yet, so they may have changed!), but these are still very useful for people on both sides of the Atlantic.
- They go with Credit, Liquidity, Operational, Market and Underwriting risks as main "material risk categories". I'll come on to the fantastic paper on risk classification I recently attended the public rollout of later, but it has a lot of relevance to how one might approach this aspect of the proposed ORSA, including avoiding any double coverage.
- No prescribed suite of stresses, such as for the SCR standard formula - this seems to imply that "internal models" are either obligatory, or are considered to be whatever is in place currently (i.e don't need a phenomenal amount of resource to validate to the authorities). The regulators therefore are able to "provide input" into model component calibration if they don't like what is presented via ORSA.