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A non-technical guide to ORSA Requirements in Qatar
JABRAN NOOR, FSA FIA
Executive Director - Actuarial & Risk Management
Tajweez Advisory
tajweezactuarial.com
NON-TECHNICAL GUIDE SERIES
Tajweez Actuarial provides a brief synopsis of the Insurance Regulations in the GCC through the
“Non-Technical Guide Series”
We aim to bring clarity and achieve common understanding of compliance requirements.
NON-TECHNICAL GUIDE SERIES
Our consultancy services are based around insightful simplification of complex ideas.
tajweezactuarial.com
Implemented the Own Risk and Solvency Requirement (ORSA) in 2015.
Companies have to comply with QFC PINS Part 2.4 requirement starting year end 2015
QATAR
4
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
What is ORSA?
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2015
adequacy of an insurer’s risk management policies, procedures and controls
insurer’s present and future solvency positions
Detailed forward looking assessment of
2015
“Own” solvency assesment - current & future
Management of material risks
Identify potential business vulnerabilities
Objectives
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
What is ORSA?
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1. What is meant by “Own” in ORSA?
The assessment of risk and solvency under ORSA is made by the Company itself as oppossed to any pre-defined standard. Because ORSA is a part of company’s risk management strategy, the company should have regard to the other factors included in that strategy, including risk profile, tolerance and exposure while conducting ORSA.
2. Is ORSA a management tool or supervisory tool?
ORSA is both a mangement tool and a supervisory tool. In order to gain full advantage of ORSA, companies should embed it within the decision making procedure. It should be robust enough to provide confidence to the Company and the Regulator that the Company has the ability to remain solvent in face of risks faced by it. ORSA should be adequately documented in order to satisfy the regulator.
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
What is ORSA?
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3. What is meant by “forward looking” ?
ORSA is not a performance measurement tool evaluating the past performace of the Company. Instead it projects the ability of the Company to meet current and future capital adequacy, manage material risks and helps in identifying future vulnerabilities.
4. ORSA is just a fancy name for Financial Condition Report?
ORSA is unique because it encourages the management to consider risk management not as a compliance exercise but as a management tool. Companies are encouraged to anticipate potential capital needs and take actions before it is too late.
ORSA is not a one-off exercise. It is a continuous evolving process and should be a component of Company’s Enterprise Risk Management. Furthermore, ORSA is not an assessment of the actuary but the Company itself.
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
What is ORSA?
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its overall solvency needs
own view of capital adequacy
actions taken for management of risks
financial resources needed to manage business prudently and to meet minimum capital requirements
nature and quality of capital resources needed
impact on solvency of reasonably foreseeable change in risk profile
multi-period assessment of solvency, minimum capital and business continuation
In ORSA, Insurer must consider
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
What is ORSA?
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2015
Stress Tests
Occurance of extreme events
unlikely but possible adverse scenarios that would disrupt insurer’s business model
Quantitative Evaluation
0
7.5
15
22.5
30
0 Q1Y1 Q2Y1 Q3Y1 Q4Y1 Q1Y2 Q2Y2 Q3Y2 Q4Y2
7 7 7 7 7 7 7 7 7
2119
10
14 13 12 11 12 11
2119 20 21
25 25 2426
28
Normal Environment
Stressed Environment
Risk Tolerance
Time Period
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
ORSA Requirements
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QFC Entity should carry out ORSA annually.
Assessment appropriate to nature, scale and complexity of insuer’s business
Financial resources needed to manage business prudently and to meet minimum capital
requirements under range of scenarios
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
ORSA Requirements
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Methods will differ between insurers, ranging from simple to complex
Insurers will have to make own judgement about complexity, stress tests, assumptions etc.
Insurers are expected to be transparent in their approach and maintain auditable records
Practical Considerations
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
ORSA Report
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2015After conducting the ORSA, insurer must prepare a report that includes a statement that
the board of the insurer participated in the assessment and approved the report.
Insurer must provide a revised ORSA report if the circumstances or risk profile of the
insurer changes
Regulator may ask for revised report in case the methodology is not robust
Tajweez Advisory CO WLL - ORSA Requirements in Qatar - Jabran Noor
Our Services
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Gap Analysis
Development of Models
ORSA Compliance Report
ORSA Documentation
Facilitate Implementation
Stochastic Modeling
• The guide has been prepared to describe the regulation in a simple manner. It is in no means a substitute to the original regulation.
• No liability is assumed regarding the accuracy of the information contained. We welcome your feedback on any aspect of the report.
• The report should not be reproduced , published or disseminated, in part of full, without explicit permission of Tajweez Advisory.
• We love exchanging ideas and look forward to hearing from you. Quote the pass phrase “QTR1TAJ” at time of project approval and you qualify for a 5% discount on consulting services!!
Information Usage
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Jabran Noor, FSA FIA Executive Director -
Actuarial & Risk Management
ACTUARIAL SERVICES
RISK MANAGEMENT
ANALYTICS
TRAININGS
Our consultancy services are based around insightful simplification of complex ideas.