Saw this nice piece from Towers Watson on ERM developments Stateside (I had blogged on this from an ORSA perspective a couple of weeks ago). The pressure from the AM Best ratings agency seems to be pretty intense to this regard, and indeed Towers Watson's article here highlights what AM Best consider "leading" and "lagging" practices.
"Leading" practices have all the hallmarks of the IAIS/Solvency II world that we all know and love ("tolerance", "appetite", "risk-adjusted return", "modelling used in strategic decision making" etc etc). What is more enlightening is the section on "lagging" practices, as it seems pretty bold to say that by not adhering to the AM Best standards you are a laggard.
However, the stats are pretty sobering (and mouthwatering if you are consulting over there!). 90% of respondents' risk tolerance definitions were "too broad", 12% had no ERM Committee/CRO and 72% do not use internal models.
Towers (who have issued guidance on the 2010 iteration) go as far as to say that the new ERM section on Best's SRQ (Supplementary Ratings Questionnaire) will '...become more influential on ratings outcomes' and that this evolution will compel insurers to 'stay ahead of their peers and Best's evolving ERM criteria'. How the SRQ obligations marry into the ORSA guidance due out soon is another thing, but fascinating times ahead for the North Americans...
An online repository for Solvency II, ERM and Corporate Governance material and comment from the Principal of Governance Matters, an independent Risk Consultancy firm based on the Isle of Man.
Showing posts with label SRQ. Show all posts
Showing posts with label SRQ. Show all posts
Monday, 17 October 2011
Friday, 30 September 2011
NAIC - ORSA and ERM developments in North America
Spotted this over on the Casact website, and though it was worth sharing - emerging ORSA approach over with our North American chums at the NAIC, which seems to be spooking some insurers who are quaking at the thought of a 2012 ORSA imposition and lobbying for more time (same on this side of the Atlantic fellas!).
Seems to be a bit of draft ORSA guidance on the go (along the same lines as our Level 3 document in the EU), and the one stand out piece for me was the projection of capital requirements between 2-5 years out - seems instinctively light for insurers to project no further than 5 years, but maybe the long-term guarantee piece isn't such an issue Stateside.
There is also an enlightening piece from AM Best on the same document regarding their Supplementing Rating Questionnaire, how best to prepare for it and respond to it, and some benchmarking stats on positive responses to the questionnaire content. Sadly I don't get to dabble too much in this area, so if any of the Stateside readers have any experiences to share on ORSA progress or ERM SRQ completion I would be interested to hear.
Seems to be a bit of draft ORSA guidance on the go (along the same lines as our Level 3 document in the EU), and the one stand out piece for me was the projection of capital requirements between 2-5 years out - seems instinctively light for insurers to project no further than 5 years, but maybe the long-term guarantee piece isn't such an issue Stateside.
There is also an enlightening piece from AM Best on the same document regarding their Supplementing Rating Questionnaire, how best to prepare for it and respond to it, and some benchmarking stats on positive responses to the questionnaire content. Sadly I don't get to dabble too much in this area, so if any of the Stateside readers have any experiences to share on ORSA progress or ERM SRQ completion I would be interested to hear.
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