Study On The Solvency Of Non-life Insurance Company In China

There are so much detailed insurance solvency regulations in the insurance law of China, such as solvency margin, capital request, and the drawing ratio of reserves. All of those regulations are very important to keep the solvency of insurance company. But many of them are laid down according with the experience and without been testified. So, it's very important to test on the foundation of history data in Chinese insurance market. The purpose of this dissertation is just to test some of those regulations. Non-life insurance market is mainly analyzed because of the difference between non-life and life insurance market.In this dissertation, the request of minimum solvency margin, minimum capital request, and the drawing of reserves are tested. Then, the requests of maximum premium written, unexpired insurance reserve and outstanding loss reserve are also tested. Except that, the China insurance regulation system still has many problems, such as the admitted asset ratio, financial index system of insurance companies. Etc. All those are designed concretely in this dissertation. At last, those factors that affect the solvency problem of Chinese insurance companies are analyzed to get their comparative risks.There are six chapters. Chinese insurance market is analyzed from different direction, and the above purposes are carried out at last. In Chapter one, the contents of this dissertation are introduced, including how and why to choose this project, the methods and the structure of this dissertation.In Chapter two, the basic concepts of solvency are introduced, such as solvency, solvency margin, and what are those factors that influence solvency, and how do they affect. Then, three typical insurance regulation systems are introduced. They are Britain, U.S.A, and Japan. So, those regulations of different countries and their characters are analyzed in detailed in Section three, includes Britain, U.S.A, Canada, Japan, France, Australia and Hong Kong. The insurance history of Britain is very long, and it's regulation system is very loose. China has used the solvency margin calculation of Britain for reference. The regulation methods in Britain are an important part in Section three and introduced very detailed. The insurance is very developed in America;the solvency regulation methods are also perfect. The regulation system includes many fields of insurance company, such as insurance rate, product line and the change of solvency. Many methods are used in American which are very useful to the Chinese insurance market. In Section four, the regulation methods of China are analyzed, which involve normal regulation, solvency regulation and the discipline of insurance industry. At the lastSection of this Chapter, compared all the methods of every countries, the problem of Chinese solvency regulation system are found on the combination of so much advanced methods, and many suggestions are given to improve it.In Chapter three, some solvency models are constructed and developed, which includes Ratio Model, Risk Theory, Ruin Theory and Comprehensive Model. The Premium Method and Claim Method are constructed on the foundation of Ratio Model. Then, Ratio Model is extended to test the sensitivity of reinsurance rate and sales tax rate. The particular relationships among the solvency and reinsurance rate, sales tax rate are calculated directly. So, when those regulation about reinsurance or sales tax change, the regulation of solvency must change either. Risk Theory and Ruin Theory fund on the stochastic process which is very complex. It must be predigested so that it can be used in demonstration research. Many approximate methods are developed. Except that, different methods are got on different conditions of no reinsurance or proportional reinsurance. The Comprehensive Model is introduced very carefully in Section four. It's about the financial indexes that are used by other scholars, the affect to solvency from interior factors and exterior factors, the relativity among them. Etc. At last, the four solvency models are compared.Chapter four is demonstration part in this dissertation. Using the history data of Chinese non-life insurance market, the minimum solvency margin is got through Ratio method, risk reserve of every insurance line are got through Risk Theory and minimum capital request are got through Ruin Theory. Then, the operation costs of reassured companies and reinsurance companies are compared. The consequences show that it's useful to reinsurance in China. Different results are got according with whether there are reinsurance. It seems that the minimum solvency margin is a little low, which makes the risk of Chinese insurance market bigger. The minimum capital request is a little high, which build a high barrier to enter insurance market and slower the development of Chinese insurance market. Except those, many applicable suggestions are put forward according with the results of those models.Many relevant problems of solvency are taken into account in Chapter five. The solvency margin is defined as the difference between the admitted asset and admitted liability. The admitted assets are equal to the real assets multiplied with different risk indexes. The assets risks of Chinese economics market are analyzed in Section one. Then, taken the risk indexes of every kind of asset in U.S.A into reference, the asset risk indexes are designed completely considering the economics difference between China and America. The method to calculate the admitted assets is designed also. In Section two,some other regulation about solvency are tested, including the maximum premium written, unexpired insurance reserve, legal reinsurance rate and outstanding loss reserve. The researches are made out from two directions, first is the practice of those regulations, and then is the test of their rationality. The results show that the growth speeds of non-life insurance companies are very fast. The premium written are bigger than the four times of the sum of capital and accumulation fund, while other regulations are practiced very well. Averagely, most insurance companies abide strictly the insurance law and other regulation. The solvency regulation financial system is designed in Section three. Now, the insurance regulation is loosing year after year. The regulation office only pay attention to the solvency instead of control everything of operation. The most part of regulation methods is quantitative analysis. Many countries have established the solvency regulation financial system, and they have been used for more than twenty years. Their effect and feasibility have been tested. Taking the advanced experience of foreign countries, the solvency regulation financial system is designed according with the reality of Chinese insurance market, and the system also suits with the insurance law and other regulations in China.The Comprehensive Model is used in Chapter six. Those factors, which have effect on the risk of Chinese insurance market, are analyzed, including interior factors and exterior factors. The history data is so limited in China that the statistical methods can't be used which requests a large sample. So, Grey System is used in this dissertation. The effect of interior factor, exterior factor are analyzed respectively and then compared. Their different effects to solvency are got at last, and the comparatively importance is got also. The result shows that the reinsurance risk is the most important risk, and the interior factors are always more important than exterior factors.All the results of this dissertation are got from the reality of Chinese insurance market. Those theories used in this dissertation are very sound, and the data used are very real. So, the results are very reasonable. They are worth to be taken as reference by the insurance regulation office and insurance companies.