Introduction to ORSA OIC Risk Management Seminar 30 June 2016 - - PowerPoint PPT Presentation

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Introduction to ORSA OIC Risk Management Seminar 30 June 2016 - - PowerPoint PPT Presentation

Mar 11, 2023 249 likes •674 views

Introduction to ORSA OIC Risk Management Seminar 30 June 2016 William Song Part 1 ORSA BACKGROUND This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every

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SLIDE 1

Introduction to ORSA

OIC Risk Management Seminar 30 June 2016 William Song

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SLIDE 2

ORSA BACKGROUND

Part 1

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 3

Own Risk and Solvency Assessment

  • Aims to assess in a continuous and prospective way,

the overall solvency needs of an insurance company.

  • A set of processes constituting a tool for decision-

making.

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 4

ORSA - Background

“The concept of ORSA was developed through the introduction of Solvency II in Europe. The concept was then adopted by the International Association of Insurer Supervisors(IAIS) in their Insurance Core Principle (ICP) 16” – KPMG “The supervisor establishes ERM requirements for solvency purposes that require insurers to address all relevant and material risk” – ICP 16 “The supervisor requires the insurer to perform its ORSA regularly to assess the adequacy of its risk management and current, and likely future, solvency position” – ICP 16.11

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 5

Regional trend in ORSA/ICAAP in Asia-Pacific

Australia: ICAAP

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Malaysia: ICAAP Singapore: ORSA

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 6

RISKS IN NON-LIFE INSURANCE

Part 2

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 7

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SLIDE 8

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 9

Risk Library Relevant Risks

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 10

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 11

SIMPLIFIED ORSA

Part 3

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 12

Various ERM Initiatives

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 13

Board & Senior Management Oversight Stress Testing Comprehensive Risk Assessment Capital Management Plan Monitoring and Reporting Independent Review

Key Elements of ORSA

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 14

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SLIDE 15

ORSA Report Structure

Introduction Overall Risk Assessment

  • Underwriting Risk
  • Reserving Risk
  • Market Risk
  • Credit Risk
  • Liquidity Risk
  • Operational Risk

Prospective Assessment

  • Solvency Projection
  • Stress Testing
  • Conclusion

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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ORSA Report Structure – Risk Assessment

Underwriting Risk

  • The risk associated with volatilities in the timing, frequency

and severity of insurance events, relative to the expectations of the insurer at the time of underwriting, resulting in insufficient premium.

  • Gap between actual loss ratios and projected loss ratios

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 17

Underwriting Risk

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 18

ORSA Report Structure – Risk Assessment

Reserving Risk

  • The risk associated with fluctuations from unpaid insurance

loss estimates from prior accident periods, resulting in insufficient reserve.

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 19

Reserving Risk

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 20

ORSA Report Structure – Risk Assessment

Market Risk

  • Risk arising from fluctuations in interest rates, foreign

exchange rates, share prices and other relevant market prices

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Market Risk

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0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2009 2010 2011 2012 2013 2014 2015

Market Risk Index Financial Year Market Risk Index Illustration

Market Risk Index This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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ORSA Report Structure – Risk Assessment

Credit Risk

  • The risk of financial loss as a result of failure by another party

to meet its contractual obligations or failure to perform them in a timely fashion

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 23

ORSA Report Structure – Risk Assessment

Liquidity Risk

  • The risk that the insurance company may be unable to meet

short term financial demands (i.e. pay claims).

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 24
  • 5

10 15 20 25 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Cash Required

THB 'Billions

Financial Year

First liquidity graph

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Stress

$ Borrowed * Interest Rate * Time Period = Liquidity Index

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 25

Liquidity Risk Index Illustration

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0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2009 2010 2011 2012 2013 2014 2015

Liquidity Risk Index Financial Year Liquidity Risk Index Illustration

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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ORSA Report Structure – Risk Assessment

Operational Risk

  • The risk arising from inadequate or failed internal control

processes, people, system and other factors

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 27

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Solvency Projection

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0% 50% 100% 150% 200% 250% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Solvency Ratio Financial Year

Solvency of Company X 1st Trigger Point 2nd Trigger Point Regulatory Requirement

Stress

This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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OTHER ELEMENTS OF ORSA

Part 4

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Board Oversight

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 31

Risk appetite

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 32

ORSA process

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 33

Continuity assessment

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Linkage to business

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 35

KEY CHALLENGES IN THAILAND NON-LIFE INSURANCE INDUSTRY

Part 5

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 36

Difficult to rationalise “value” from ERM/ORSA

  • ver a short-term period

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 37

Acceptance from the board

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 38

Lack of local expertise

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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SLIDE 39

Over-emphasis on actuarial support

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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Cultural difference

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This presentation is intended solely for information purpose only. It does not constitute legal or other professional advice. Whilst every effort is taken to avoid errors, MSIG/presenter cannot accept responsibility for the accuracy of any statement, extract or information contained within this presentation.

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