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ERM News - Guy Carpenter Releases New ERM Benchmarking Study

In March 2014, Guy Carpenter released their most recent study of enterprise risk management policies of European Insurers and Reinsurers

Guy Carpenter reported in their study entitled "Enterprise Risk Management Benchmark Review: 2013 Update" that there was a continued movement toward more robust enterprise-wide risk management practices in the period following the financial crises of 2002 and 2008. With the goal of greater transparency, regulators and rating agencies have increased the emphasis on ERM-related disciplines in capital adequacy reviews. The study cited ongoing sovereign bond crisis and the natural catastrophe events of the last few years are showing how important it is today for insurance companies to comprehensively assess corporate risks by accounting for various risk sources as well as the correlation between them. Insurance regulators have been recently pushing for the creation of internal risk assessment tools.

In particular, Solvency II has introduced Own Risk and Solvency Assessment (ORSA), which aims to implement a new aggregated risk management culture. Its intent is to create a consistent framework that ensures the connection between internal and external risk drivers. For example in the United States beginning in 2015, regulators will be expected to require companies with more than $500 million in direct premiums to file an annual ORSA summary report with regulators. The summary report would require the (re)insurers to report their risk management framework, assess their risk exposure and measure their solvency with respect to an articulated business plan.

For more information from the study, visit Guy Carpenter's "Enterprise Risk Management Benchmark Review: 2013 Update".

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