Last Updated: 7/28/2026

The 2008 global financial crisis exposed gaps in the U.S. group supervisory framework when American International Group (AIG) faced significant financial distress. AIG Financial Products, a London-based non-insurance component of the AIG holding company system, incurred substantial losses from high-risk investments.

The financial distress of AIG’s holding company system had broader implications for U.S. insurers. In response, state insurance regulators strengthened group supervision and increased focus on non-insurance activities, reputational risk, and systemic risk.

U.S. state insurance regulators subsequently launched the Solvency Modernization Initiative (SMI) to modernize the insurance supervisory framework. The SMI addressed capital requirements, governance and risk management, group supervision, statutory accounting and financial reporting, and reinsurance.

The initiative also reaffirmed the role of Risk-Based Capital (RBC) as a foundational solvency safeguard that supports regulatory intervention when warranted.

Regulators also recognized the need to evaluate an insurance holding company system’s financial condition, assess capital at the group level, and understand potential impacts on affiliated insurers. In November 2011, the NAIC introduced the U.S. Own Risk and Solvency Assessment (ORSA) as a key SMI regulatory tool.

ORSA requires insurers to conduct and report a comprehensive self-assessment of current and future risks and capital adequacy. This process gives regulators deeper insight into an insurer’s financial resilience.

The NAIC Risk Management and Own Risk and Solvency Assessment Model Act (#505) became effective on Jan. 1, 2015. It requires large and medium-sized U.S. insurers and insurance groups to conduct an ORSA regularly and document the results in an ORSA Summary Report.

The ORSA Guidance Manual, adopted by the NAIC in March 2012, provides guidance and instructions for conducting the ORSA and filing an ORSA Summary Report.

ORSA: What is it?
An ORSA is an internal process through which insurers or insurance groups evaluate their current and prospective risk management and solvency positions under stress scenarios.

The assessment considers reasonably foreseeable and relevant material risks, including underwriting, credit, market, operational, and liquidity risks, that could affect an insurer’s ability to meet policyholder obligations.

ORSA represents an insurer’s own assessment of its current and future risks. It is intended to encourage management to anticipate capital needs and take proactive steps to reduce solvency risk.

ORSA is not a one-time exercise. It is an ongoing process that should be integrated into an insurer’s Enterprise Risk Management (ERM) framework. The approach and content of an ORSA report may vary by company.

Purpose and Scope

Under the ORSA Guidance Manual and the Risk Management and Own Risk and Solvency Assessment Model Act (#505), ORSA has two primary goals: to promote effective ERM practices and to provide a group-level view of risk and capital that supplements the legal-entity perspective.

ORSA applies to individual U.S. insurers with more than $500 million in annual direct written and assumed premium and to insurance groups with more than $1 billion in annual direct written and assumed premium.

Covered insurers must conduct an ORSA at least annually, document the process and results, and submit a confidential high-level ORSA Summary Report to the lead state commissioner or, upon request, the domiciliary state regulator.

U.S. jurisdictions have formally enacted Model #505, which became an NAIC accreditation standard in 2017. The NAIC estimates that approximately 300 ORSA reports are filed annually, including about 200 group-level reports and 100 single-entity reports.

Large and medium-sized U.S. insurance groups and insurers submitted the first ORSAs in 2015 under Model #505. State insurance regulators began reviewing ORSA Summary Reports in 2016.

The NAIC ORSA Implementation (E) Subgroup supports implementation by providing ERM and capital modeling education for regulators. The Subgroup also monitors the effectiveness of Model #505 and the supporting ORSA Guidance Manual and recommends revisions as needed.

The ORSA Implementation (E) Subgroup released ORSA Information Sharing Best Practices to support coordination among state regulators while preserving the confidentiality of company ORSA reports.

Regulatory Coordination

In 2018, the Subgroup released Form F/ORSA Comparison, which compares ORSA with Form F, also known as the Enterprise Risk Report.

ORSA focuses on risks associated with insurance entities within the holding company system. Form F focuses on material risks associated with non-insurance entities that could affect the Ultimate Controlling Person’s ability to financially support insurance entities during periods of distress.

Guidance Manual Updates

Since its initial adoption, the Subgroup has updated the ORSA Guidance Manual three times. In December 2017, a section was added to explain the manual update process.

In December 2022, the manual was updated to address ORSA requirements for Internationally Active Insurance Groups (IAIGs). The update required IAIGs’ ERM and capital management frameworks to include specific elements intended to reduce potential systemic risk associated with insolvency.

The 2022 update also required all ORSA filers to address material risks arising from non-insurance entities, discuss main business objectives, and provide more detailed liquidity risk disclosures.

The December 2026 update is expected to address capital transparency, state-specific filing dates, ORSA questions, controls reporting, use of the Group Capital Calculation tool by IAIGs, and other overarching ORSA guidance matters.

2026 Guidance Priorities

ORSA is intended to address three core questions: What are the insurer’s key risks and how are they managed? How significant are those risks? How much capital is needed for key risks, both currently and prospectively, compared with available capital?

A significant 2026 update relates to capital transparency. The guidance clarifies the expectation that insurers provide a high-level summary of how material risk categories contribute to overall capital needs, both currently and prospectively, compared with available and projected capital.

Regulators view this as an important enhancement because a single aggregated capital measure, such as an RBC ratio or economic capital ratio, may not show which risks are driving capital needs or how those drivers may change over the business planning horizon.