New York Proposes ERM and ORSA Regulation

by Saul Ewing Arnstein & Lehr LLP
Contact

Summary

The New York Department of Financial Services (“DFS”) has proposed a new insurance regulation that details the requirements associated with adopting an enterprise risk management (“ERM”) function, conducting an annual Own Risk and Solvency Assessment (“ORSA”), and filing related reports. The Proposed Regulation was published in the New York Register on January 22, 2014. Interested parties have 45 days after the Proposed Regulation’s publication to file comments with the DFS.

Applicability to Non-New York Domestic Insurers

In addition to its applicability to New York domestic insurers and their holding companies, the Proposed Regulation applies in some circumstances to non-New York domestic insurers that are licensed in New York and their holding companies. For example, the Proposed Regulation’s requirement concerning the adoption of a formal ERM function applies to non-New York domestic insurers that are licensed in New York and their holding companies. Additionally, the Proposed Regulation’s requirement concerning the filing of an annual ERM report applies to holding companies that control non-New York domestic insurers that are licensed in New York. In contrast, the Proposed Regulation’s ORSA requirements only apply to New York domestic insurers.

ERM Requirements

The Proposed Regulation would require (i) holding companies that directly or indirectly control a New York authorized insurer, and (ii) New York domestic insurers that are required to register with the DFS under Insurance Law Articles 16 or 17, to adopt an ERM function and to file an annual ERM report with the DFS. Additionally, the Proposed Regulation would require New York authorized insurers that are stand-alone insurers (i.e., not part of an Article 15, 16 or 17 system), to adopt an ERM function. Such stand-alone insurers would also be required to file an annual ERM report only if they are New York domestic insurers that have annual direct written and unaffiliated assumed premium totaling an amount equal to or greater than $500 million.

The Proposed Regulation sets forth minimum requirements for the ERM function. The Proposed Regulation also requires the ERM report, which would be due by April 30 of each year, to include a discussion of the items listed in the NAIC’s Insurance Holding Company System Model Regulation, including but not limited to the following topics:

  • any material developments regarding strategy, internal audit findings, compliance or risk management;
  • any acquisition or disposal of insurance entities and reallocation of existing financial or insurance entities;
  • developments in any investigations, regulatory activities, or litigation that could have a significant bearing or impact; and
  • the business plan of the insurer and a summary of the insurer’s or system’s strategies for the next 12 months.

ORSA Requirements

New York domestic insurers that have annual direct written and unaffiliated assumed premium in an amount equal to or greater than $500 million (or, $1 billion, if the insurer is a member of a holding company system, Article 16 system, or Article 17 system) must also conduct an annual ORSA, consistent with the process set forth in the ORSA Guidance Manual (the “Guidance Manual”) published by the NAIC. Insurers that are not exempt from the requirement to conduct an ORSA must submit an annual ORSA summary report to the DFS, beginning on December 1, 2015, and the summary report must be prepared in a manner consistent with the Guidance Manual. The ORSA summary report must be signed by the company’s chief risk officer (or comparable executive) who has the responsibility for the oversight of the ERM function and attest, to the best of his or her knowledge and belief, that the domestic insurer or other member of the domestic insurer’s holding company system, Article 16 system, or Article 17 system applies the ERM function described in the ORSA summary report. The officer must also attest that a copy of the ORSA summary report has been provided to the company’s board of directors, or “appropriate committee thereof.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Saul Ewing Arnstein & Lehr LLP | Attorney Advertising

Written by:

Saul Ewing Arnstein & Lehr LLP
Contact
more
less

Saul Ewing Arnstein & Lehr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.