As reported previously, the NAIC approved the Risk Management and Own Risk and Solvency Assessment Model Act in September 2012. In connection with the model act, the NAIC’s Own Risk and Solvency Assessment (E) Subgroup of the Financial Condition (E) Committee (the “ORSA Subgroup”) is tasked with revising the Own- Risk Solvency Assessment Guidance Manual (the “ORSA Guidance Manual”) to outline the reporting requirements that insurers will be required to report under the model act. In March 2013, the ORSA Subgroup approved an updated version of the ORSA Guidance Manual (available here), which reflects comments from insurers participating in a pilot program to test how the ORSA disclosures mandated by the model act will work in practice. Significant changes to the document include added language as to what insurers should include in their Summary Report, such as the basis of accounting, a summary of material changes from the prior year, a comparative view of group capital from the prior year and a description of which entities within the group that are included or an organizational chart. The updated document also adds a glossary of terms in the Appendix.
A second pilot program is expected to test the updated ORSA Guidance Manual policies later this year. In the meantime, the ORSA Guidance Manual updates will have to go through the NAIC’s approval process, but it is expected that the NAIC will approve all of the updates.