Study On The Surrender Factors And Policy Proposals In China Life Insurance Market

Since2000, China has broken up several "surrender tides", the life insurance company surrender rates remain high. In2012CIRC held a national work conference on insurance supervision and issued a document which said they want to guard against five types of risks. The most important is surrender risk. Surrender will cause big impacts on the insurance company and the insured. For insurance company, it will affect the insurance company’s balance sheet structure and solvency and impact of its expected profits and more likely bring great reputation risks. For policyholders, the halfway surrender will make them lose insurance function, and impact their long-term financial plan.The key aspect to study the issue of surrender is to look for factors and to understand the mechanism of these factors on the policyholder surrender behavior, to insight the motivation of policyholders’surrender behavior, to help insurance companies find the reason of surrender rates soaring. Only by doing these can we minimize the impact of surrender and maintain the stability of the insurance companies’operation. Meanwhile, the study of surrender factors also has a very important impaction on policy holders and insurance regulators. First, it will help policyholders clear their surrender motivations and make them more rational. Secondly, in terms of insurance regulators, a deep understanding of surrender factors help them find the root of matters and find the loopholes in the system, and thus improve the relevant laws and regulations. So the market can avoid system defects caused by market risks and ensure the insurance industry develop steadily and sustainable.This article is not limited by traditional perspectives and methods. On the basis of existing research literature review this article use case study, a variety of qualitative and quantitative methods, such as from the macro to the micro level issues in-depth and detailed discussion.This article is divided into five parts:Chapter I:Introduce the research background, significance, proposes the research method, innovation and shortcomings. Chapter II:Describe the overall surrender trend of China’s life insurance, analyze the surrender situation of the foreign life insurance companies and select a surrender incident broken up in2000as a typical case to study.Chapter III:Analyze the impact of macroeconomic factors of China’s life insurance surrender from the corporate level, policy level as well as the level of the external environment. At the company level, this article focuses on three factors which are the company’s insurance structure, marketing channels and the risk management and control capabilities. At the life insurance policy level, we use the methods which is often used by insurance company used to analysis the impacts of different channels, different payment methods and policy years. In the external environment level, we analyze the impact of the legal environment, regulatory environment and the investment climate on surrender.Chapter IV:Take policy holders as the research object, using the utility maximization model to verify the impact of individual microscopic initial wealth values surrender, expected future income, personal health status, risk aversion, inheritance impact on beneficiaries.Chapter V:Offer policy recommendations on how to effectively prevent the surrender. This paper proposes targeted policy recommendations from the corporate level, policy level, as well as environmental aspects.