Analysis On The Risk Management Of Commercial Health Insurance Companies On Economic Capital

Profitable insurance company need risk management to maximize enterprise valueand remain relatively stable at the same time by minimizing risk costs. Insurance regulatorfocuses more on the matched-degree of the insurance’s risk tolerance and actual risk level.The regulation patterns and level changes as the development of insurance industry,meanwhile regulation system in China turns to the second generation of solvency system.The second generation of solvency system emphasizes the insurance companies’ actual risklevel and has a classified treatment to different companies of different risk levels, whichreflects the system transformation from size-oriented to risk-oriented. Economic capital isan important measurement model of risk tolerance for insurance companies’ riskmanagement and regulator’s regulation. Commercial health insurance in China is at itsearly stage with few specialized health insurance companies which lack relatively maturecorporate management and risk management systems. The mismatching of healthinsurance premium and protection level caused by bad competition and the excessiveinsurance compensation make health insurance dispensable. Insurance companies don’tabandon it with an eye to keep a market share and long-run strategies. Effective riskmanagement is a prerequisite for the sustainable operation of health insurance founds,therefore we should explore the best fit risk management strategies for a stable andeffective development of commercial health insurance.The thesis uses economic capital model and risk management theories to calculate andanalyze the economic capital level of the four commercial health insurance companies inChina. The calculation is based on the financial data from2006to2012of the fourcommercial health insurance companies in China. SPSS software has been used to do aK-S test and T-test of the economic capital model. Then the comparison among eachcompany’s financial capital, regulation capital and economic capital will be used toanalyze the advantages and disadvantages of the company’s risk-management-ability andthe reasons it caused by. At last some suggestions for health insurance companymanagement and regulation would be given.