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The survey found that insurers had made progress in defining their risk management framework but a significant proportion had yet to define and implement a risk appetite statement and develop a framework for assessing their risk exposures.
Under the Risk Management and Own Risk and Solvency Assessment Model Act, which is expected to be effective from January 1, 2015, insurers will be required to undertake an ORSA and submit an ORSA summary report to their state regulator each year.
Insurers will need to develop a comprehensive enterprise risk management function. Insurers will also be required to conduct detailed forecasting and analysis of capital requirements.
The survey of 40 US insurers found that while three-quarters (77 per cent) of companies had fully defined a risk management framework, only one-third (33 per cent) had fully implemented the framework.
Curt Burmeister, vice-president risk solutions at IBM, said the survey showed insurers were more prepared for section one of the ORSA guidance manual on risk assessment but were less prepared for the other sections covering risk assessment and economic capital and prospective solvency assessment.
Insurers, said Burmeister, still had a lot of work to do if they are to meet the 2015 implementation deadline. "Two years is not a long time and insurers may be overly optimistic in where they stand", he said.
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