Kathmandu: The Insurance Board has provided a tool kit to insurers for own risk and solvency assessment(ORSA). The regulatory authority has already provided the tool kit under the process of implementation of risk-based capital(RBC).
The Insurance Board has directed all the insurers to adopt the principle of RBC by the end of 2023. The 103 pages ORSA toolkit is expected to be useful documents for the insurers to assess their own risk.
In the tool, different risk assessment tools are provided for both the life and non-life insurance companies. The headings of risks identified for life insurance include biometric risk, expenditure risk, lapsed insurance risk, catastrophe risk, reinsurance risk, integrated risk, investment related risk, asset liability management risk and liquidity risk, credit risk, operational risk, market created risk, perpetuity risk. Biometric risk includes the risk of early death, risk of longevity and the risk of disability.
In the proposed tool, it is suggested for non-life insurers to self-assess seven types of risks, including underwriting risk, backup risk, catastrophe risk, integrated risk, reinsurance risk, market risk and existence risk.
This document aims to help the Board, the Senior Management and key staff of the insurers, and the
Insurance Regulatory Authority of Nepal (Beema Samiti) to:
- understand the current and projected risk profile of the insurer and its key drivers
- understand the adequacy of capital available to support its business plan
- understand any material changes to risk profile
- understand risks not covered by regulatory capital
- understand key drivers of the balance sheet
- identify potential management actions to mitigate risk.
This document intends to be an intuitive and simple toolkit to provide
- capacity building for insurers and reinsurers on the ‘own risk and solvency assessment’ (ORSA),
- advice to insurers and reinsurers for the implementation of the ORSA,
- guidance for the usual operation of the ORSA, and
- capacity building for the supervision of the ORSA within a risk-based framework