Research On The Affecting Factors On Surrender Rate Of Chinese Life Insurance Business

As an important part of Chinese insurance industry, life insurance is increasingly prominent in the insurance market dominance. The original insurance premium income, Original life insurance premium income, and Original life insurance premium income are1.433925trillion yuan,972.143billion yuan, and869.559billion yuan in2011, respectively. The life insurance is accounted for89.45%of the original insurance premium income, the market share of66.67%. The life insurance business is the main source of China’s insurance premium income.To ensure the stable development of the insurance market, we must guarantee the smooth carrying out of the life insurance business. However, competition in the life insurance industry in recent years has increasingly intensified. Life insurance companies, especially newly established small and medium-sized life insurance companies, introduced a large number of investment-oriented life insurance products to attract customers. Usually, there is a very important optional provision in the investment-oriented life insurance contracts-surrender. The increase of surrender rates not only makes the increase in the operating costs of the insurance company and but causes the unexpected loss of the insurance company, which would bring liquidity risk to the insurance company. Therefore, in order to avoid the loss of surrender and develop the life insurance industry, it is necessary to understand the main factors that affect the surrender rates of life insurance products.Significant research efforts in recent years have been devoted to the study of the surrender rates for applications in insurance fields. However, the majority of research has focused on the qualitative description, quantitative analysis for the surrender rates still remain great challenges. Most research models for the study of life insurance are still limited to the analysis of traditional life insurance products, which focus on the analysis of the environmental impact of macroeconomic factors and ignored the impact of the surrender rates characteristics of policy itself. The models do not apply to China’s investment-oriented life insurance products. Therefore, in order to have an accurate comprehension of surrender rates, we need to construct a new mathematical model, and to identify the factors that really affect our life insurance products surrender rates.The first part of this article describes the research background, influencing factors of surrender rates in China’s life insurance products, summary of qualitative and quantitative research of the surrender rates for life insurance products, and the introduction of a generalized linear model in the life insurance study.The second part of this article introduces the new-type life insurance products. and analyzes the current situation of China’s life insurance market (high surrender rates) and its negative impact.The third section highlights the theoretical basis of the surrender rates based on generalized linear models, and compared with traditional research methods of surrender rates.The forth part of this article is based on a universal life insurance. We estimate the parameters in the generalized linear model, and the evaluation of goodness of fit.The fifth part of the article based on the above findings, discussed how to reduce surrender rates of life insurance products.