Research Of The Systemic Risk Of Chinese Insurance Industry

After subprime crisis in 2008, systemic risk and its prevention has become one of hot spots of financial circles. However, in our country, as the systemic risk the insurance industry, which is an important part of the financial sector, has not been paid enough attention. With the rapid development of the insurance industry, ties between insurance industry and financial market are deepening; risk of insurance industry will be transfer to the financial system and the broader economy system through such as insurance investment, insurance assets securitization etc. then a systemic risk will be triggered. Therefore, this paper attempts to measure the systemic risk of the insurance industry.Firstly, the paper reviews the research results about the definition, origin, infection process and measure of systemic risk in recent years. On the basis of others’ research results, we try to understand the mechanism of systemic risk in detail. And based on relevant the theoretical framework, the paper analyzes the definition, causes, infection process and measure of systemic risk of insurance system.Secondly, the paper the try to use Co Va R model which is based on quantile regression, and data of Chinese’s listed Insurance Company week closing price, the Shanghai Composite Index, bank Index, insurance index and the stock index from 2012 to 2014, respectively from the systemic risk of listed insurance companies and the financial system. Then the paper study the systemic risk of Chinese’s insurance industry in three aspects: the systemic risk of insurance company and the financial system; the insurance industry and the banking industry, the securities industry; the insurance industry and the financial system, The empirical results show that: the systemic risk of systemical y important insurance company, and the systemic risk between the insurance industry and the other financial need to be taken seriously.Finally, according to the above research conclusion, the paper put up with the advices to deal with the systemic risk of China’s insurance industry from two angles : from the angle of insurance companies, they should strengthen internal control,improve flexibility of management strategy, strengthen the management of the matching of assets and liabilities; from the angle of regulatory authorities, they should establish risk supervision system of financial industry on risk linkage, build an assessment and early warning system of systematical y important insurance company up to the actual situation of our country’s insurance industry, strengthen the supervision of the systematical y important insurance companies and improve its anti-risk ability etc..This paper has two aspects of innovation. Firstly, we try to use the Co Va R model of to measure the system risk of China’s insurance industry. The Co Va R model can introduce the risk spillover effect into the research framework of Va R model, and capture the risk spillover effects between financial institutions, individual financial institutions and the financial system. Co Va R solve effectively the defects of the Va R model that underestimates the risk level of the system in extreme events. At the same time, Co Va R model will express the risk spillover effect at specific numbers. It’s clear and intuitive, easy to operate. Secondly, we try to measure systemic risk of the insurance of our country from three different angles. Systemic risks and its spillover effect is widely existed between the financial institutions, individual financial institutions and financial system, the financial sub sectors and the financial system, a single point of view is difficult to grasp the whole picture of the system risk of insurance industry. This paper attempts to measure systemic risk of China’s Insurance industry in three aspect: the individual insurance company, insurance industry and financial system and the other financial industries and the insurance industry and the financial system.