Risk Management Of Life Insurance Company During The Period Of Transformation

Since the life insurance industry was allowed to re-operate in 1982,after twenty years of development,China's life insurance market has made a tremendous achievement.The premium income realized 446.375 billion Yuan in 2007,life insurance market beginning to take shape.Life insurance companies amount to 54, initially formed a well-structured market system,with foreign company and domestic company co-exist,and have set up all kinds of companies,such as life insurance companies,the Life Insurance Group,specialized companies,reinsurance companies and intermediary companies.What's more,the system of laws and regulations and supervisory systems tend to improve gradually.With the full opening up of the life insurance market,increasing competition in the market and completing shareholding system reform of life insurance companies,China's life insurance market is undergoing a major transformation period.This transformation was represented in three aspects:At first,the life insurance market fully opened,the insurance company increased rapidly,and market competition intensified significantly,consequently the life insurance market structure has been gradually transformed from the oligarchic monopoly to the monopolistic competition.Secondly,from the insurance company perspective,with the transformation of the life insurance companies,such as restructuring to be joint-stock companies,listed and the establishment of modern enterprise system,operation performance becomes to be the main development objectives of companies.Thus the development models gradually changed from the extensive model,which means the speed is the utmost goal of company,to the economical growth model which focuses on the structure and benefits,pays attention to product and service innovation,and emphasizes on market development.Thirdly,from the regulation perspective,the role of regulatory authorities turned from role of leading the development of the industry to the role guiding the development of the industry,and the supervision fashion turned from the strict supervision of the market behavior to the solvency oversight. Premium rates have gradually become market-oriented,and investment channels have been constantly broadened.In the process of market transition,both the life insurance industry and individual companies will experience significant change of risk,for example,the market-oriented pricing mechanism will bring new pricing risk,the investment risk arising from the diversification of investment channels,the operational risk from centralized operation system and restructured processes,the innovation risk and the grouping management risk,and so on.During this transition period,how to prevent risks and control changes effectively for life insurance companies,directly relates to the successful transformation of the life insurance market and the healthy long-term development of life insurance industry.In this dissertation,we systematically analyze which kind of risk may arise or change for life insurance companies in the process of market transition,and try to find out the root-based reason of their risk,therefore,put forward corresponding risk control measures and recommendations.What's more,according to the experience of risk management development in international life insurance companies,the theory of enterprise risk management in life insurance companies is introduced in this dissertation.Furthermore,the meaning of overall risk management in life insurance companies,the constraints encountered and the corresponding measures are fully analyzed.Through this research,we think that both the insurance regulator and the insurance company should take effective measures to prevent and control those risks which may take place in the transformation period.From the regulatory perspective, firstly,it is necessary to gradually improve the system of laws and regulations, strengthen the guidance and set up basic standards about the internal grouping management of life insurance companies,the product and service innovation,the business process transformation,the investment and pricing behaviors,and over sighting market competition behaviors and maintaining market competition order. Secondly,promote the regulation method turning from the supervision of the market behavior to the solvency supervision regulation,and set up an effective risk warning and solvency monitoring indicator system in order to detect and control the risk of life insurance companies in time;Thirdly,establishing and improving market access and exit mechanisms,particularly the market-exit mechanism,and maintaining the market stability.Fourthly,to improve the information disclosure system,strengthen market supervision functionality.From the company perspective,it is necessary to change in business philosophy, avoid blind expansion,and pay more attention to enhance enterprise performance, focusing on risk prevention which should be included in the scope of company decision-making.Secondly,we need to improve corporate governance and risk internal control system and establish an effective system of internal firewall.Thirdly, to strengthen the introducing,training and management of talent,improve staff quality,especially the training of high-quality risk management personnel.Fourthly, we should increase the technological input,improve the life insurance companies' technical and management capacity,improve risk control technology platform. Fifthly,the company should pay more attention on the employees' risk education and training,strengthen risk management responsibility and awareness,nurturing the corporate culture of risk management,thus risk management will be truly integrated into employees' daily activities.