Research On Early Warning Of Solvency Of Life Insurance Company In China

With the development of Chinese economics, the role of the insurance becomes more and more important. At the same time, the development of the insurance is concerned by the public. The insurance could be divided into two categories, the life insurance and the property insurance. The premium income of the life insurance makes up 60% of the total premium income according to the data in 2013. So the life insurance products are the major products in Chinese insurance market. By the same way the life insurance companies are the most important principals in the insurance market. The research objects in this paper are these companies.The insurance supervision and administration department attaches importance to the solvency of the life insurance companies. The insurance contract is one of the aleatory contracts. Each contract may increase the debt risk of the life insurance companies. The term of the life insurance products was longer than the property insurance products’ and the insurable risks in life insurance contracts are more complicated. In order to maintain continuous profit, it is necessary for life insurance companies to withdraw the reserve regularly. The insurance contract is a contract of adhesion to the policy holders. The policy holders only have the option to insure or not. So the policy holders are disadvantaged in the insurance relation. In order to preserve the benefits of policy holders, the regulation to the solvency is necessary.The regulation on the solvency of insurance companies was enacted at 2008. In this document, the standard of the solvency ratio of insurance companies is assigned definitely. The solvency ratio of insurance companies in Chinese insurance market could be calculated by this standard. Then the warning model would be built. The logistic regression model, the survival analysis model and the discrimination analysis model are widely used in the warning research. The first two models will be used in this paper. The warning effect of the generalized logistic regression model is better with an accuracy of 88%. It is a very nice warning model. The survival analysis model is not very suitable with an accuracy of 50% and the accuracy of the interval prediction is 100% in this paper. But the most important advantage of the survival analysis is that it could calculate the specific lifetime of the insolvent life insurance companies.According to the solvency of the life insurance companies and the analysis of the forewarning models, the solvency of most life insurance companies in our country is adequate. The solvency of the life insurance companies is related to the operation capacity, the profitability and the balance sheet structure. The solvency of the life insurance companies which are specialized in operating health insurance products is more adequate than other life companies, this condition could reveal that specialized operation would enhance the solvency of life insurance companies. The effect of the forewarning models will be better with the increase in the data.