Research Of China Insurance Investment Efficiency

Insurance investment is a major profit source of insurance industry. What's more, the competition in traditional insurance market is becoming more and more aggressively, which makes the investing activities being more attractive than ever before. According to the trends of the whole insurance industry, as a result of the sever competition of the insurance industry, the premium revenue has been scream out dramatically, which will add great pressure on the income statement of insurers. All these above lead insurance companies run after investment business for more profits. In China, as a result of opening financial market, more foreign competitors come in this market to seize the market share. These foreign insurance companies also expand their business to the investment, including QFII and so on. The experienced foreign giants will give our insurance industry not only great benefits but also competitive pressures. In the history of our insurance investment, the investment business is once the burden of the industry because of inefficiency.It is believed that China will have greatest potential to develop its insurance market. Since 2001's entrance of WTO, the CAGE of premium income growth was 24.5%, which is a very high level. In 2008, the premium income of China reached 978.4 billion, with a 39% year-on-year growth rate. However, the efficiency of China insurance still can not make we satisfied about it. What's more, the contribution of our insurance industry is very tiny compared with the level it should be. The major reason is the industry's operation inefficiency, especially the investment inefficiency compared with the foreign competitors. Our industry development focused on the scale expansion for a very long time, which had very negative effect on our industry. In order to enhance the competitiveness and achieve greater efficiency in the insurance industry and realize the target with the core of increasing operation efficiency of insurers. So, the intensive study of the efficiency of the insurance industry has very important significance.In this paper, I started my research from status of China's insurance investment industry. With the help of data envelopment analysis, I can conduct a detailed assessment of insurers' investment efficiency. The study found: the usage of insurance funds of China relatively lacks efficiency; most of the companies need improvement in their investment sector. Their expansions are largely unadvisable. In comparison, life insurers performed better than property insurers. Chinese-funded insurance companies are as good as the pure foreign-funded companies, both of them are more efficient than the joint-ventures, from which we can find the advantage of simple company controlling structure. At last, the paper gives some policies about how to improve the efficiency of China insurance industry.