The Orsa risk quantification challenge

The risk quantification element of Solvency II’s Own Risk and Solvency Assessment raises some potentially difficult – and awkward – questions for insurers. Some are concerned about how supervisors will treat the results of insurers’ analysis and what the implications could be for their capital requirements. Clive Davidson reports

Of all the elements of Solvency II, the Own Risk and Solvency Assessment (Orsa) would reasonably be expected to be one of the least controversial. After all, as the name implies, it is the element that insurers devise and control for themselves. There are guidelines of course, because the Orsa is one of the cornerstones of Solvency II. But guidelines should be exactly that – there to guide rather than prescribe. However, few things are simple or straightforward with the new directive.

The Orsa