The Study On Insurance Companies’ Own Risk And Solvency Assessment (ORSA)

Own Risk and Solvency Assessment (ORSA) is an emerging topic in the worldwide, which aims to complete a comprehensive upgrade on risk management and capital management based on the regulatory requirements. The insurance company’s internal process start from the management level, examining its system and providing risk insights using a top-down concept, while combine appropriate risk management approach with certain capital allocation criteria, in order to fully integrate the company’s internal structure to support forward-looking strategic planning expectations, and ultimately to achieve the optimal allocation of resources, enhancing industry-wide efficiency and productivity.ORSA possesses forward-looking feature, sees the whole picture, based on the principle of appropriateness, targets on long-term sustainability goals, using diversified technical approaches as support, is naturally born an ideal evaluation tool which is also realistically operational. Although ORSA is valuable to both insurance companies and insurance regulators, currently no systematic study on the ORSA is accessible, mostly being mentioned with a few words. So this paper attempts to combine the existing practice of foreign countries and regions with the overall institutional framework and the latest guidance requirements of China Risk Oriented Solvency System, using both risk-driven and value-driven methods to find new direction for future development of China’s insurance industry. Within this framework, this paper gives full play to the imagination, and tries to find a new growth point of value. Specifically, the paper comes out of the development process and the current progress of the global ORSA, sums up ORSA requirements and implementation of representative countries and regions, then launches a detailed analysis of the multiple challenges facing the ORSA on the basis of theory study, focusing on key issues and difficult problems, which may offers some innovative ideas and puts forward constructive suggestions to the industry and regulators. Hope this research on ORSA will fill gaps in knowledge of the past to some extent, and support the healthy and orderly development of China’s insurance industry.