On May 19, 2015, Governor Abbott signed into law the Texas version of the NAIC’s Own Risk and Solvency Assessment (ORSA), which became effectively immediately and will be codified in Chapter 830 of the Texas Insurance Code. The NAIC’s model act version of ORSA was adopted in 2012 and Texas now joins to approximately 20 other states that have previous adopted their own versions. In essence, ORSA requires that an insurer self-identify, monitor and manage those risks which are material and relevant to its own business operations and then provide regulators with a high level summary report on the assessment process and the results in certain situations. As with the NAIC model act, Texas ORSA imposes three principal requirements for Texas insurers: (1) maintaining a risk management framework, (2) completing an own risk and solvency assessment and (3) filing a summary report with the Texas Department of Insurance as specified in the statute. Although the statute requires insurers to take some steps immediately, ORSA summary report filings do not begin for Texas insurers until 2016. Because of the highly confidential and proprietary nature of the information included in such a summary report, Texas ORSA provides various assurances of confidentiality and evidentiary protections for filing insurers. By statute, the ORSA summary reports are not subject to public disclosure. Texas ORSA filings will be effected in accordance with the NAIC’s published ORSA Guidance Manual as it is updated from time to time. As with the NAIC model act, Texas ORSA is targeted at larger companies and groups. Accordingly, subject to some qualifications, insurers with less than $500 million in annual direct and unaffiliated assumed premiums and insurance groups with less than $1 billion in annual direct and unaffiliated assumed premiums are exempt.
The session law containing Texas ORSA can be found here. Once codified, the statute containing Texas ORSA should be available here.
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