2024 Health Meeting VIRTUAL - Session 8B: Rating Agency View of Enterprise Risk Management and Stress Testing for Health Insurers 7.25.24 Recording

In this session, we will examine AM Best's credit rating methodology, the evaluation of Enterprise Risk Management (ERM) Programs for insurers, and how ERM evaluations are incorporated into ratings. AM Best staff will present the results of a study of AM Best-rated health insurers' ERM programs. The study looks at the scope of ERM programs, including stress testing by company size and company type. The study also looks at the evaluation of ERM program frameworks and an insurer's risk management capabilities. The risk framework evaluation includes stress testing, the process of quantification/qualification of risks and risk mitigation, economic capital modeling, risk-based capital, and the importance of data quality and analysis. Other ERM program aspects we will discuss include maturity of programs, governance, ORSA reporting, top risks, risk tolerance, and level of integration in business strategy development and day-to-day operations. The presentation will also include the distribution of ERM assessments for AM Best-rated health insurers and the characteristics of companies/ERM programs within each assessment category. Attendees will learn about AM Best's evaluation of ERM programs and how it impacts ratings, integration of ERM within a health insurance organization, and the type and scope of stress testing performed.