ORSA SWITZERLAND

ORSA SWITZERLAND

INSIGHT INTO THE STATUS QUO OF SWISS INSURERS AND REINSURERS July 2017

Illustration 2: Which line of business is your company in?

Direct Insurance

34%

Health Insurance

33%

Reinsurance

33%

CATEGORY 5

CATEGORY 4

CATEGORY 3

CATEGORY 1

CATEGORY 2

Illustration 3: Please select the supervisory category to which your company is assigned

 Direct Insurance  Reinsurance  Health Insurance

Illustration 4: What is the state of implementation? Evaluation by business activity.

60% 36% 27%

27% 30% 27%

36% 27% 10%

ORSA is fully integrated into organization and processes

Main adjustments implemented, fine tuning pending

 Direct Insurance

2

 Reinsurance

First experiences with the implementation made, processes and structures must now be formalized

 Health Insurance

18%

We are still at the beginning

Illustration 5: What is the state of implementation? Evaluation by supervisory category.

61% 43% 28% 29% 14%

14%

11%

ORSA is fully integrated into organization and processes

Main adjustments implemented, fine tuning pending

First experiences with the implementation made, processes and structures must now be formalized

We are still at the beginning

 Supervisory categories 2 and 3  Supervisory categories 4 and 5

Illustration 6: Scope of the ORSA report

more than 75 pages 50 to 75 pages 30 to 50 pages Less than 30 pages

9%

20%

18%

0%

10%

9%

18% 70%

64%  Direct Insurance

0%  Reinsurance

27% 55%


1

Illustration 7: Estimated expense in man days for the implementation of the ORSA process (expenditure of all staff involved).

250 200 150 100 50 0  Direct Insurance

 Reinsurance


Illustration 8: Which business area is responsible for the execution of ORSA?

67% 73% 73%

18% 17% 9% 18%

17% 18% 9%

FINANCE

ACTUARIAL

RISKMANAGEMENT  Direct Insurance

 Reinsurance

OTHERS


Illustration 9: What was the involvement of the different business areas in the ORSA process?

RISKMANAGEMENT / CRO / RISK COMMITEE FINANCE / ACCOUNTING INVESTMENT MANAGEMENT COMPLIANCE UNDERWRITING INTERNAL AUDIT  Very strong  Strong  Punctually  Not at all

2

Illustration 10: Planning horizon for the ORSA

25%

5 and more years 4 years

9%

8%

0%

9%

8%

67%

3 years

82%


 Reinsurance

92%


Illustration 11: Has external support been used for the implementation of ORSA 2016?

70% 27%

18%

No support

45%

55% 10% 18%

up to 10.000 CHF  Direct Insurance

18% 20%

9% 0% 9%

10.000 CHF to 50.000 CHF more than 50.000 CHF

 Reinsurance


Illustration 12: In addition to the regulatory framework which views were applied?

36%

60% 55%

60% 18%

Internal performance indicators

18%

18% 10% 18%

Ratings


Others  Reinsurance

0%

30%

18%

Solvency


3

Illustration 13: Which risks were considered within the scenarios?

Insurance risks 100% 80% 60% Other risks 40% 20% 0%

Market risks

Operational risks

Credit risks


 Reinsurance


Illustration 14: How many scenarios were evaluated?

0%

2 scenarios

0% 0%

45%

3 scenarios

9%

5 scenarios

18% 20%

18%

4 scenarios

0% 18%

10% 27%

6 scenarios and more

10% 36% 70%


 Reinsurance

27%



 Reinsurance


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Illustration 15: Who confirmed on behalf of the company that the selected scenarios are representative of the overall risk profile?

Illustration 16: Which risk mitigating measures were taken into account in the scenarios?

73%

89% 63% 33%

Reinsurance

55% 50%

45% 38%

Adaptation of the investment mix and strategy  Direct Insurance

56% 18%

Adaptation of underwriting

 Reinsurance

38% 33%

Others


Illustration 17: What is the SST ratio after 3 years in the planning scenario?

600 500 400 300 200 100 0  Direct Insurance

 Reinsurance


Illustration 18: To what extent does ORSA influence strategic business processes?

Formulation of risk appetite and tolerance Asset Management Development of business strategy Dividend planing Financial planing Liquidity planing M&A valuation Product development  very strong  strong  punctually  not at all

5

Illustration 19: To what extent has the implementation of ORSA improved the following aspects in the company?

Risk culture Exchange of risk-relevant information Company-wide view of risks Collaboration between business units Quantification of risks / risk categories Risk mitigation / reduction Identification of risks / risk categories Definition of escalation triggers Strategic decision-making processes Planning process Allocation of responsibilities Risk control / monitoring Understanding of Risk / Return Tradeoff Risk prevention Product development Risk selection / Underwriting  very strong

 strong  punctually

 not at all

Illustration 20: What do you expect from politics and / or supervision?

40%

More practical orientation

40% 40%

Less changes

30% 30%

Clearer rules

10%

Stronger principle-orientated approach

More dialogue

10% Others


6

60%

0%

20%

70%

40%

30%

20% 20% 50%

10%

 Reinsurance

80%


Illustration 21: Pending action fields

STAGE OF DEVELOPMENT

EMBEDDING IN THE ORGANIZATION

INSTRUMENTS UND TOOLS

«We have fully integrated ORSA into our organization and processes.»

- Analyze the use of ORSA as a management instrument

- Measure efficacy and efficiency of the process

- Review the effectiveness of the process

- Review by internal auditors

- Foster the involvement of business units «We implemented the most important adjustments, now we are talking about fine tuning.»

- Integrate ORSA in the existing risk management and planning process

«We gained initial experience with the implementation and now have to formalize processes and structures.»

- Eliminate duplications

«We are at the beginning of the implementation.»

- Develop multi-year planning (financial planning) and integrate with ORSA

- Arrange a workshop with the supervisory board

- Coordinate ORSA with other business processes

- Increase awareness among management regarding the relevance and use of ORSA

- Increase awareness and align objectives across business units

- Conduct a Gap-Analysis - Establish ORSA as a standing item on the agenda of the supervisory board

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