In a recent report by Germany’s regulator BaFin urges insurers to improve their Orsa reporting for 2018. As early as the Solvency II preparatory phase, the companies were asked to go through a reduced form of the ORSA that took into account the fact that the quantitative Solvency II requirements had not yet been met. In the meantime, the majority of insurers have submitted two reports, and first analysis are performed by the regulator.
Result: The ORSA reporting of the companies is overall on a good path. As is to be expected, many insurers are dealing intensively and very granularly with their main risks – for example, market and default risks as well as underwriting risks. The assessment of operational risks has also improved compared to the initial reports. In addition, many companies also report risks in their ORSA reports that are not relevant in the calculation of the Solvency Capital Requirement (SCR), such as strategic, reputation and liquidity risks.
However, a number of weaknesses have also emerged in the analysis. There is also a need for further optimization. The findings of BaFin have already been incorporated into a stock survey published by the European insurance supervisory authority EIOPA in June. German companies should examine the extent to which EIOPA analysis affects them and implement the steps to optimize the ORSA process where necessary.