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The South African Insurance Industry Survey 2016 | 13
2016 Updated mock ORSA requirements assumptions underlying the SCR calculation on a
Most of the additional requirements for the 2016 qualitative basis and quantify the significance of
ORSA cycle are onerous and will necessitate a deviations. Many companies have adopted the
significant amount of consideration and planning Standard Formula as their ORSA capital basis.
to deliver:
–– KPMG view: Regardless of the basis chosen
–– Paragraph 1.34g states that the ORSA report (SCR or own Economic Capital basis),
should document “details on the conclusions the exercise to meet compliance with
and the rationale for them from the assessment these requirements or to demonstrate the
of the continuous compliance with the appropriateness of the chosen basis is a
requirements of regulatory capital and technical technical exercise and will require a large
provisions.” amount of work from technical experts.
This needs to be thoroughly understood and
–– KPMG view: Insurers should understand planned for.
what this entails and how close their 2015
ORSA was to enable this, what conclusions –– Guideline 16: Where only solo entities
were made and what additional work is produced an ORSA for 2015, for 2016 a Group
required for 2016. ORSA is also required for groups. If the
approach chosen was to only submit a group-
–– Paragraphs 1.35 to 1.38 cover Management wide ORSA, for 2016 groups can still assume
Information (MI), embedding the ORSA into that they have a dispensation to only produce
business decisions and demonstration of the a group-wide ORSA for regulatory compliance
Use Test. purposes.
–– KPMG view: Insurers should have already –– KPMG view: If insurers chose to produce
designed ORSA MI, or have done so by a group-wide ORSA only, they will need
the end of Q2 2016 at the latest, to allow to ensure that the report also covers all
delivery and implementation into MI cycles requirements for solo reporting and have a
from Q3 2016. back-up plan in the event that they do not
get dispensation for 2017. In addition, local
–– Paragraph 1.38 further states “…. If the insurer entity management should ensure that
(group) considers that the internal reports have their ORSA reporting is adequate to meet
appropriate levels of details also for supervisory effective risk management and business
purposes then the same reports may be decision making regardless of the approach
submitted to the supervisor.” chosen.
–– KPMG view: In an end state this will be a –– Paragraph 1.106 is a requirement for the 2016
best practice approach where effective risk mock ORSA and is relevant to internal model
management and business decision-making users and so is not applicable to most SA
is the primary objective and compliance insurers.
with regulatory requirements an outcome.
–– Paragraphs 1.73 to 1.83 require that insurers
assess deviations from its risk profiles and the
