Governance, ORSA and reporting provisions

Solvency II will introduce new rules on company governance and the Own Risk and Solvency Assessment (ORSA). Reinsurance is recognized as an effective tool to mitigate risks, therefore the adequacy of reinsurance is also an important topic under Governance and ORSA.

Governance requirements

Governance requirements relate principally to a company's compliance, actuarial, internal audit and risk management functions. Companies need to comply with governance provisions ensuring transparent organisational structures, clear risk management functions, adequate internal audits and controls, established actuarial functions and fit and proper outsourcing.

Make use of your relationship with Swiss Re to share expertise and know-how to develop a compliant system. Our partnership approach of "smarter together" can help create solutions for your organisation.

Own Risk and Solvency Assessment (ORSA)

The Own Risk and Solvency Assessment (ORSA) is a regulatory framework which should also benefit insurance companies and their internal stakeholders in their efforts to manage risk, capital and solvency. A key element of ORSA is that the implications of their risk and capital assessment must be considered in their business plan. With its forward looking perspective, ORSA also takes the effects of potential independent risk scenarios into account. While Solvency II's pillar 1, which defines risk capital requirements, is calibrated for a 1-in-200 year event, ORSA scenarios will focus on timespans of approximately 10 to 30 years. ORSA therefore should not be used to define additional capital requirements but to support the preparedness of the company, something which also needs to be demonstrated to the supervisor. It is advisable to run ORSA as an ongoing process and to report its results annually to the supervisor.

Reinsurance will play an important role under ORSA, effectively mitigating risks under many scenarios. Swiss Re is ready to tailor reinsurance solutions to meet ORSA requirements.


Solvency II's reporting requirements are far more extensive compared to Solvency I. Efficient processes will be key to mastering this process.   

The Regular Supervisory Report (RSR) details the company's business results, its organisation, risk profile and capital management. In the first year of application, annual reports should be submitted no later than 20 weeks after the close of the financial year. Consequent RSRs, which may be required on a less-than-annual annual basis (at the supervisor's discretion), will be due 14 weeks after the financial year has ended.

There will be additional standardised reporting requirements on annual and quarterly bases that use Quantitative Reporting Templates (QRTs). The timeline for the quarterly reporting will be 8 weeks after quarter close in the first year of application and 5 weeks from 2019. Annual reporting, on the other hand, will be due 20 weeks after the financial year end in the first year of application and 14 weeks from 2020.

Public disclosure

New disclosure requirements will standardise the reporting of information to the public. The Solvency and Financial Condition report provides transparency to policyholders and investors by describing a company's financial condition in detail, eg through solvency ratios with and without applying so-called LTG (Long-Term Guarantee) measures, details on own funds, technical provisions, and reinsurance. It should be published yearly, within 20 weeks of the financial year end for financial years ending on or after 1 January 2016. Time frames are gradually reduced to 14 weeks by 2020.

Quantitative Reporting Templates (QRTs)

EIOPA has defined a set of templates for different quantitative reporting requirements, namely for supervisory reporting and public disclosure on an annual or quarterly basis. Different procedures might apply from country to country such as electronic submissions in the so-called XBRL (eXtensible Business Reporting Language) format, or additional tools such as "Tool4u" as developed by EIOPA.

We expect that many companies will need to enhance their reporting systems to support direct electronic submission, thereby facilitating the reporting effort. The new reporting requirements will also trigger changes to the underlying reporting systems. Changes might be even more far reaching: the granularity of the required information goes beyond the usual formats for management purposes, making changes to the source systems together with enhancements of the governance processes inevitable. A possible positive impact of this process may be improved data exchange between primary insurers and reinsurers.    

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Capital requirements

Solvency II provides for precise measurement of risk exposure. Tailor-made reinsurance products will allow optimization of risk capital for each product line.

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