Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
The Own Risk and Solvency Assessment is a MAS requirement for Singapore insurers, but most boards treat it as an actuarial exercise rather than a strategic tool. Here is what MAS looks for in the ORSA process and where most boards fall short.
The Own Risk and Solvency Assessment is the most governance-valuable document a Singapore insurance board can demand from management, yet in most MAS-regulated insurers the ORSA reaches the board as a compliance summary confirming the capital ratio is within requirements. Singapore's MAS risk-based capital framework requires every licensed insurer to complete an ORSA connecting stress-tested capital analysis to the strategic plan, not only to satisfy a regulatory checklist, but to give the board the information it needs to make informed capital decisions. As a statutory CRO who signed ORSA submissions for MAS and presented them to boards across Singapore, I have seen the gap between an ORSA produced for the regulator and one genuinely used for governance: the difference is almost entirely a function of whether the board chooses to engage with the stress scenarios rather than just the base-case compliance conclusion. Capital adequacy, reinsurance strategy, own-risk stress testing, and dividend decisions all connect to the ORSA, and the boards that make those connections are better equipped to govern at the level MAS expects.
In most organisations it is not. What typically reaches the board is a summary that confirms the organisation is within its capital requirements, presents the key assumptions at a high level, and reassures directors that the regulatory deliverable has been met. The stress test results, the scenarios that reveal where the capital position is under genuine pressure,often do not make it to the board in a form that directors can engage with.
What the ORSA should be telling the board
The value of the ORSA is not in the compliance conclusion. It is in the stress test analysis, what happens to the capital position in the scenarios the business is most exposed to, and what those results imply for strategic decisions the board is being asked to make.
- If the pandemic scenario shows a capital deficit within twelve months, what does that mean for the dividend proposal currently on the board agenda?
- If the climate transition scenario reveals significant liability reserve pressure, does the reinsurance programme adequately protect the capital position?
- If the interest rate stress shows the investment portfolio deteriorating in a way that impairs the solvency margin, what does that imply for the asset allocation review?
- What is the capital cost of the strategic plan, and is the ORSA showing that the organisation has sufficient capital to fund it through the scenario range?
“The ORSA is produced for MAS. But its real audience should be the board, the people making the strategic decisions the stress tests are designed to inform.”
How to use the ORSA as a board
The boards I have worked with that use the ORSA most effectively do three things differently. They engage with the stress test scenarios rather than just the base case results, asking which scenarios are most relevant to the current strategic decisions and what the results imply for those decisions. They connect the ORSA outputs explicitly to capital allocation proposals, requiring management to show the capital cost of proposed investments and growth plans in ORSA terms. And they treat the ORSA as a live document, using it as the reference point for capital discussions throughout the year, not just the moment of regulatory submission.
If your board is receiving an ORSA summary that does not enable any of those conversations, it is worth asking for a different format. The technical team can produce it. They often need to be asked.
What MAS Looks for in the Singapore Insurer ORSA Process
MAS expects the ORSA to be a genuine board-level exercise, not a report produced by the actuarial team and noted by the board. The key markers MAS looks for include: board engagement in setting the risk appetite that the ORSA tests against, forward-looking stress scenarios that go beyond regulatory minimums, and a clear linkage between ORSA findings and strategic decisions. Where the ORSA is treated as a compliance output rather than a decision input, MAS has flagged it in supervisory engagements.
Three Areas Where Singapore Insurance Boards Consistently Fall Short on ORSA
- Stress scenarios are too mild and too narrowly defined. MAS expects scenarios that test the insurer under conditions that would genuinely threaten solvency, not just scenarios that stress-test against a mild downturn.
- The board approves the ORSA report without having shaped the risk appetite it tests against. If the board is approving a completed document rather than engaging in the design of the exercise, the ORSA is not achieving its purpose.
- ORSA findings are not feeding back into strategy and capital planning. If the board cannot point to a decision it changed or a capital action it took in response to the ORSA, MAS will question whether the exercise is genuine.
How the ORSA Connects to MAS's Broader Insurance Governance Expectations
The ORSA sits within MAS's broader framework for insurance board governance. It connects to the board's responsibilities under MAS Notice 126 for the ERM framework and risk appetite, to the requirements of the RBC2 capital framework, and to what MAS expects from the board risk committee. Boards that treat the ORSA as a standalone regulatory deliverable miss the point. It is the mechanism through which the board demonstrates that it understands the insurer's risk profile and can make informed decisions about capital and strategy under uncertainty.
Common Questions
What is an ORSA and why does it matter for Singapore insurance boards?
The Own Risk and Solvency Assessment (ORSA) is a regulatory requirement for MAS-licensed insurers. It stress-tests the capital position against adverse scenarios and connects the risk profile to the capital strategy. For boards, it is the primary tool for understanding whether the organisation's capital is adequate for its strategic ambitions and its risk exposure.
How should a Singapore insurance board use the ORSA?
The board should engage with the stress test scenarios, not just the base case compliance conclusion,and connect ORSA outputs to strategic decisions including dividend proposals, growth plans, reinsurance structure, and asset allocation. The ORSA's value is as a strategic governance tool, not only a regulatory deliverable.
What is an Own Risk and Solvency Assessment (ORSA)?
An Own Risk and Solvency Assessment (ORSA) is a process required by MAS for Singapore-licensed insurers under RBC2. It requires the insurer to assess its risk profile, test whether its capital is adequate under stress scenarios, and link those findings to strategic planning. The ORSA is a board responsibility, not an actuarial deliverable.
What does MAS require from the ORSA process for Singapore insurers?
MAS requires the ORSA to be a genuine board-level exercise with meaningful stress scenarios, clear linkage to the risk appetite the board has set, and demonstrable impact on strategic and capital decisions. MAS expects the board to have shaped the exercise, not simply approved a finished report produced by management.
How often must Singapore insurers conduct an ORSA?
MAS requires Singapore insurers to conduct the ORSA at least annually, and also following any material change in the insurer's risk profile. The board should determine whether circumstances warrant an ad hoc ORSA rather than waiting for the annual cycle.
What is the difference between the ORSA and the MAS regulatory solvency assessment?
The regulatory solvency assessment is a backward-looking calculation of whether the insurer meets MAS's minimum capital requirements at a point in time. The ORSA is forward-looking: it asks whether the insurer's own view of its risk profile suggests it has adequate capital to meet its strategic objectives under a range of scenarios. The ORSA should be more demanding than the regulatory minimum, not a restatement of it.
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About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.