Risk Management On Application Of Insurance Funds In China

The Chairman of China Insurance Regulatory Commission, Dingfu Wu has pointed out that the use of insurance funds is an important link in insurance market, capital markets and the money market, and can fully support the national economic construction in an important way. Judging from the contemporary international insurance market, the development of the use of insurance funds has become a trend. Since the 1980s, the increasingly fierce competition in the insurance industry, underwriting losses or declining profits forced insurance regulatory agencies and insurance companies continue to adapt to the new market environment, strengthen the use of insurance funds in all-round business. The insurance companies will become important institutional investors. In developed country the rate of using of the funds has reached 90%, such as bonds, stocks, secured or unsecured loans, real estate and other fields. But how to use the funds reasonably and prudently is the most important issue. Since the insurance fund was investment in the capital market, the majority point was that we should limit the proportion of insurance investment in the capital market. In particular, the ratio of the stock market since China's capital market is not perfect now. But at present there is another contradiction, most insurance companies cannot invest fully according to ratio. In fact, it is not because insurance companies do not want to, but dare to. We found that there are various risks, For example, China's financial market risks, interest rate risk, asset-liability mismatch risk. And we cannot completely control them.Although the "risk control guidelines for the use of insurance funds" has been issued for a few years, and has played in a very big role, with the rapidly changing financial market, the insurance industry also continues to develop, insurance investment channels are expanding, policies are perfecting, all of which require us to constantly keep up with the pace of progress and improvement this development. In this paper, the advices were given to the insurance companies and government on how to control the risk of insurance investment. The basic structure is divided into three sections, introduction and conclusion.Introduction: Introduce the topics background of this paper and point the significance of the research, the major innovations and research methods. Chapter 1: The summary of the Insurance Investment. Begin with the nature of the insurance funds, then clarify the safety is the most important indicators; and explain the inevitability of the risk control by analyzing history of the use of insurance investment and the development of China's regulatory policy. We also analyze the insurance investment's condition in recent years, as well as the external risks and internal risks under the current financial market environment.Chapter 2: Take the United States, Britain and Japan as representation, introduce how these three countries build risk management system of the insurance funds and the characteristic of regulatory and investment scope of the various channels proportion of the comments in detail. In this chapter we finally reached the benefit from these advanced experience.Chapter 3: This chapter is the focus of this paper. Firstly from the perspective of the insurance companies, we analyze how the insurance company to control internal risk. The insurance companies should choose a suitable model on funds management according to their own historical background, the improvement of governance structure, asset size and financial condition. When should decide the investment strategy, we need to consider investment objectives, asset allocation, various types of assets investment criteria, investment cycle, and other objective factors. We also introduce how the insurance companies avoid the external risks reasonable through controlling the credit risk, liquidity risk and investment portfolio and choice of the model of portfolio management. In addition, because of the specialty of the insurance fund, we specifically put matching assets and liabilities management as a separate paragraph, suggested that insurance companies should use the asset-liability management tool to reduce risk. Finally, From the macro perspective, with the introduction of the new commission"Advice on strengthen the risk management of the use of insurance funds", we make some relevant recommendations on how to improve the investment insurance risk-control policies and regulations. Some innovations are made in this paper.1. The ways of study Because of insurance investment in the domestic is far away to perfect, but in developed country, it has been mature. So we take international comparative research methods and linked with practice, norms and Empirical Analysis, comprehensive and systematic study and exploration of the insurance risk and investment risk management.2. Innovation in research angle What the chapter concerned is under the current China's financial market environment how to strengthen risk control strategies and measures in insurance investment, but do not attempt to jump out this qualification which is hard to improve in a short period. The authors believe that it is more realistic.3. Note the new investment channels which open recently, the new risks which these bring and how to make prevention.