Own Risk and Solvency Assessment (ORSA)

Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22

Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22

Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22

Category: Capital management · Reviewed by Taylor Watts, Broker · New Business · Last reviewed

The Own Risk and Solvency Assessment (ORSA) is the insurer’s own forward-looking assessment of its risks and the capital required to meet them, as required by Article 45 of the Solvency II Directive. It is the central piece of guide 2 — the qualitative supervisory regime.

Three required elements

Article 45 requires every (re)insurer to assess:

1. Overall solvency needs — the firm’s view of capital required, taking into account its specific risk profile, appetite and strategy. This may exceed or differ from the SCR.
2. Compliance with capital requirements and technical provisions — both at the assessment date and on a continuous, forward-looking basis.
3. Significance of deviation of the firm’s risk profile from the assumptions underlying the SCR calculation (whether using standard formula or internal model).

Process and output

The ORSA is both a process (the year-round embedding of risk-and-capital thinking in decisions) and an output (the ORSA report submitted to the board and regulator).

A robust ORSA includes:

• Strategic forecast (typically 3–5 years).
• Stress and scenario testing including reverse stress tests.
• Risk appetite alignment.
• Capital planning under base and stressed conditions.
• Management actions available under stress.
• Conclusions endorsed by the board.

Governance

The board is responsible for the ORSA; the actuarial and risk functions support; the head of the risk function (an SMF role) signs off. The regulator may challenge ORSA outputs at periodic prudential reviews.

References

• Solvency II Directive 2009/138/EC, Article 45.
• PRA Supervisory Statement SS5/14 — Solvency II: ORSA.
• EIOPA Guidelines on ORSA.

Cross-references

• Solvency capital requirement
• Risk appetite
• Enterprise risk management

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