Own Risk & Solvency Assessment (ORSA) is best described as?

• A. An internal assessment of the solvency need based on the risk profile
• B. A public disclosure document required by Pillar 3
• C. An external audit of capital adequacy
• D. A model used to price insurance contracts

Answer: (A)

ORSA is the insurer’s own process for assessing how much capital is needed to cover risks it faces, based on its actual risk profile and business plans. It’s forward-looking, not just a snapshot of current capital, and it involves governance and risk management--the board and management evaluate potential adverse scenarios, apply stress tests, and determine whether the available capital is sufficient over a planning horizon. The result guides strategic decisions and capital planning, often summarized in an ORSA report for management and regulators. It isn’t a public disclosure (that’s the Pillar 3 role), it isn’t an external audit, and it isn’t a pricing model for contracts.