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The Actuary The magazine of the Institute & Faculty of Actuaries
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EIOPA opens ORSA consultation

A statement from EIOPA said that it expected the ORSA consultation to be unaffected by current discussions on the Omnibus II Directive and the future adoption of the proposal for a Delegated Act by the European Commission.

The consultation is open until 20 January 2012 and the relevant documentation can be accessed via the EIOPA website.

Paul Clarke, global Solvency II leader at PwC said that a robust ORSA is the key to embedding the effective risk and capital management envisaged by Solvency II.

"The guidelines emphasise the role of the board, both in the ORSA process and in strategic decisions," he said. "Embedding the ORSA into how the business is run will both improve decision making and meet the regulatory requirements.

"Although the guidelines avoid prescription, it is clear that the ORSA process is a considerable exercise requiring engagement from across the business and a large amount of supporting documentation and activity. The challenge for insurance groups will be to balance the detailed information required for each regulated insurance company, with the more holistic view that will be useful for a group board.

"Most insurers now have their ORSA policies in place, and are attempting dry runs to improve and iterate their process, but few have developed an effective format that allows them to articulate their risk and solvency position, both on a current and prospective basis, in a concise manner. This is the crucial next step towards making the process useable in practice and beneficial to the business."