Insurance companies tend to look backwards to see if there was enough capital for the risks that were present then. It is important for insurance companies to be forward looking and assess whether enough capital is in place to take care risks in the future. Though it is mandatory for insurance firms to comply with solvency standards set by regulatory authorities, what is even more important is the need for top management to be responsible for certifying solvency. Performing Own Risk and Solvency Assessment (ORSA) is the key for the insurance industry.
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Added by metricstream on January 25, 2011