Category: Capacity and rating · Reviewed by Matt Bartlett, Director · Founder · Last reviewed 2026-06-05
The Own Risk and Solvency Assessment (ORSA) is the Pillar 2 process under Solvency II by which an insurer assesses its overall solvency needs, risk profile and capital adequacy on a forward-looking basis. Unlike the SCR, the ORSA is bespoke to each insurer and forms a key part of the insurer’s risk management framework.
Category: Capacity and rating Also known as: Own Risk and Solvency Assessment, ORSA Related concepts: Solvency II SCR, solvency ratio, standard formula
The ORSA requires the insurer to:
The ORSA is performed at least annually and on any material change in the insurer’s risk profile. The board is required to take an active role in the ORSA process — the ORSA is not delegated to risk and compliance functions but forms part of the board’s strategic oversight.
The ORSA is set out in Article 45 of the Solvency II Directive 2009/138/EC [1]. The PRA Insurance Rulebook contains detailed expectations on ORSA content, methodology and governance.
EIOPA Guidelines on the ORSA provide further detail. The ORSA Supervisory Report is submitted to the PRA annually.
The ORSA process typically includes: review of current risk profile against risk appetite; stress and scenario testing covering business plan stresses, market stresses and operational stresses; assessment of capital needs over the planning horizon (typically 3–5 years); assessment of risk management effectiveness; and identification of management actions in stress scenarios.
For Apex clients the ORSA is not directly relevant at policyholder level, but it shapes the cedant’s risk appetite, underwriting strategy and reinsurance purchasing — and through that, the placement environment.
An illustrative example: a UK property insurer’s ORSA includes (illustrative): identification of windstorm, flood, freeze, escape of water and large fire as material catastrophe risks; stress testing against a 1-in-100 year windstorm; assessment of capital needs over a five-year business plan; identification of management actions (additional reinsurance purchase, exposure reduction, capital raising) should the SCR fall below 130 per cent.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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