A Study On The Use Of Insurance Funds

The insurance company runs two kinds of business. They are asset business and liability business. The General insurance business is called liability business and the Investment business of insurance funds is called asset business. These two kinds of business are the major sources of profit for insurance companies. As the competition in the insurance market becomes more and more intense and the supply exceeds the demand for insurance, the competition between the insurance companies will result in loss to insurance business. The profit from the Investment business will exceed that from the underwriting business and it will become the main source of profit for the insurance company. The Investment business of insurance funds has become an important means for modern insurance company to survive and develop. With the development of use of insurance funds in the developed countries, the company's underwriting business has become the channels to broad sources of funds. Although underwriting business has low profits or even losses, the investment income has been the company's main source of profit the insurance companies because of their strong use of funds. The Investment business not only compensates for the loss of the insurance business, but also becomes the backbone of the insurance business.This thesis is divided into four chapters.Chapter one: The general theories of insurance funds.This chapter elaborates the theoretical origin in insurance investment, the structure of insurance funds, the nature of insurance funds, the source of insurance funds, the ways of investment and the risk of insurance funds.Insurance funds includes two parts- own funds and external funds. Specifically, it includes its capital, accumulation fund, guarantee money, and other types of reserve funds. There are two kinds of risk in the investment process. They are the systemic risk and the non-systematic risk. The systemic risk is due to the changes in the social and economic risks. For this risk, the insurance companies can not control them. The non-systematic risk is produced in the insurance companies'investment decisions and it also exists in investment operation. Such risks can generally be controlled by the insurance companies themselves. The purpose to introduce the basic theory of investment activities of insurance firstly is for the following in-depth studies.Chapter two: the analysis of the question on the use of insurance funds in China. Firstly, this chapter reviews the development process of insurance investment in China. Secondly, it analyses the current situation of the use of China's insurance funds from the investment scale, investment structure, investment income and other aspects. Lastly, it analyzes the problems on Using of insurance funds in China .The problems are the following ones: the low rate of investment income; Irrational investment structure; Assets and liabilities are matched unreasonably; Insurance Fund is regulated difficultly; Investment environment is immature, and the lack of sufficient investment.Chapter three: learn the experience of developed countries on the use of insurance funds. This chapter introduces the situation of using insurance funds in British, American and Japanese to draw inspiration in insurance investment for China and lay the foundation for the insurance investment strategy choice.Chapter four: The choice of strategies in using Insurance Fund. Considering the problems on the use of funds and risks mentioned early and drawing on the experience of developed countries on the basis of the insurance application, put forward a sound strategy for the use of insurance funds. They include improving the investment management; improving investment management system; and strengthening the insurance investment risk management.