The Applied Research On Dynamic Solvency Testing Of Property Insurance Company In China

Insurance is based on the risk, and the insurance is a special industry which takes the risk as the operating target. Since 1980, after Restored the development of the domestic insurance business, the insurance industry has been in a state of rapid development. Compared with developed countries, China's non-life insurance industry as well as the entire insurance industry is on the initial stage. Behind the vigorous development of China's non-life insurance industry, there are also many problems, such as blind expansion of the market share in insurance companies, Blind pursuit of the premium, the imperfections laws, cut-throat competition. These problems have accumulated a variety of issues and these risks will eventually reflect the risk of non-life insurance industry's solvency, which will directly affect the. survival of insurance companies and the stability of the insurance industries.Solvency means that the insurance company shoulders the responsibility of all maturities of debt and future financial ability to pay. For the property insurance companies, the solvency at least requires that the assets are more than liabilities, which also the responsibility is borne by the economic ability to compensate. Actually the solvency; reflect a relationship between assets and liabilities.The experiences of developed countries'insurance industry suggest that Non-life insurance institutions are essential to the insurance industry as an important part. The insolvency of property Insurance Company is becoming a matter. In July 2008 there was a national work conference on insurance supervision, CIRC Chairman Wu Ding fu pointed out that, as at the end of June 2008, there are less than 12 the property of insolvent insurance companies, an increase of 2, in which a serious shortage of solvency of individual companies Because insurance companies have a significant impact on the socio-economic power, if insurance companies are not operating properly, even insolvency, it may lead to insurance company becomes insolvent, which will result in the insured economic losses, may cause economic crisis, and even lead to social unrest.The impact of external economic environment is also an important factor in the development of the property insurance companies. The current international economy is the gradual transition from recession to economic recovery, but the process is relatively slow. Since the 2008 outbreak of the U.S. sub-prime crisis, the crisis transfer from the developed market economies to emerging market economies, from virtual economy spread to the real economy, making the global economy into a downturn. In this economic crisis, national insurance companies have also been suffered form a strong impact.The model of solvency regulation in China belongs to the static control means. Solvency margin is a tool to measure of the solvency situation of insurance companies.China should also be advanced in accordance with regulatory experience, and adapt to dynamic regulation development trend, find a new regulatory approach to supervise the insolvency.Dynamic Solvency Testing (referred to as DST) is one of dynamic solvency assessment method. The insurance regulatory department will apply the dynamic supervision of solvency of insurance companies. This method can provide information of the company's financial situation, solvency, and product profitability and so on timely for the insurance companies. Regulatory agencies apply DST to the property insurance company's solvency assessment. It has the ability to detect that a variety of hazard factors which will effect the normal operation of the company and provides the strategy.Be aware that the current qualitative, static control can no longer meet the regulatory needs, the article discuss haw to establish the dynamic supervise according to the method of DSTThrough the application of dynamic solvency testing, according to qualitative and quantitative research, this article finds a suitable for China's actual situation. Though DST is a new tool, there are more and more studies abroad about it. but in our county, academician has not formed a unified system of the theoretical system,by referring to foreign research and by own thinking,., The article provides some ideas about dynamic solvency testing methods to apply to the solvency of the non-life insurance company, tries best to study the solvency of China's non-life insurance industry. This would have great practical significance, which is also the purpose of this article.