The Study On Performance Evaluation Of The Small And Medium-sized Life Insurance Company At Start-up Periods Based On Balance Scorecard

Recently, a large number of life insurance companies is setting up, from 18 in 2002 to 62 in the current. The start-up period is the most difficult time especially for the small and medium-sized life insurance companies, not only because they face the challenge from the large insurance companies domestically but also because the challenge from the foreign life insurance company which own the mature management experience, the tremendous strength as well as the abundant funds. In this sense, they must specify their development objective and their strategic target, adopting the scientific method to evaluate the business performance in order to promote their level of operation and management. Accordingly, the study on how to evaluate the business performance for the small and medium-sized life insurance companies at the start-up period is crucial both for the owner and for the managerial.The Balance Scorecard become popular in 1990s and swept globally. It enables the enterprise to transfer their strategic target into the specific strategic action, by the use of the indicator to get the feedback. The BSC has been applied in many world-class companies word wide and the result has been justified successfully in many powerful commercial banks and insurance companies. This method integrates the financial index and the non-financial ones, including four aspects:Financial, Customer, Internal Business Process, Learning and Growth. The BSC emphasize both the financial management and the evaluation of the non-financial performance. Apart form that, the user can design the proper Key Performance Indicator (KPI), give them various weights according to their different life-cycle and their strategy so as to form a complete business performance evaluation system.This dissertation is to explore how to use the BSC for the small and medium-sized life insurance companies at the start-up period and how to establish the scientific performance indicator to evaluate their business performance efficiently according to their special character.The whole dissertation is divided into six chapters as follows:The Chapter One depicts the meaning of this study, the logic structure of this article, the methodology the author use, and the innovation areas.The Chapter Two is about the definition of the small and medium size life insurance companies and the feature of different life cycle. Firstly, the author concludes the current dividing standard of different industries and studies the valuable documents study on the criterion of the insurance company. Finally, the small and medium size insurance companies can be defined as the companies those market share is lesser than 8% and assets is less than 10% of the insurance industry. According to the life cycle theory, the insurance companies would experience start-up period, growing period, mature period and the recession period. The author analyzes the different nature of these four phases. Compared to the common company and the large life insurance companies, the small and medium size insurance companies at start-up period have the specific characteristic of their own such as the risk concentration, the invisible product, the different scale, the special way of profit calculation and so on. These relevant parts are presented respectively in this chapter.The Chapter Three is about the basic theory for the enterprise business performance and the small and medium-sized life insurance company. The business performance evaluation of life insurance companies have experienced two phases:the traditional phase and improving part. However, there still exist a lot of problems especially for the small and medium size ones. It is obvious that the life insurance contract is a long term and the realization of profit is released gradually. The new business is composed of the most service structure. The current insurance accounting standards commanding the acquisition expensed instead of capitalized which made their profit deficit in the first time of years. So the universal indicators evaluating the business performance have no more sense. We need to find better method to evaluate the performance. The author studies the applicability of BSC in small and medium-sized life insurance company at start-up period both from the theory and the practice to justify its feasibility.The Chapter Four is about how to establish efficient BSC for small and medium size life insurance companies at start-up period. Introduce how to select the indicator of the performance evaluation for them. The author design the questionnaire to the small and medium-sized life insurance companies and get the feedback to screen the final indicator and specify every indicator including their calculation equation.The Chapter Five is about how to determine the weigh of the selected indicator. This chapter present the method called AHP and the how to determine the weight specifically from the expert from the managing officer to insure the credibility of the result. The AHP is to establish the comparing matrix from top to the bottom. Apart from that, according to the different quality of these indicators, we should make them comparable, namely, standardization. At last, the author introduces how to make the final score.The last chapter is about the conclusion, summarize the above chapter, and point out the shortages of this dissertation.The main innovation areas of this article are as followed:Firstly, point out the special performance characteristic of small and medium-sized life insurance company at start-up period compared both with the universal enterprise and the large life insurance company. Secondly, base on the Balance Score Card, the author use the questionnaire methodology to design the proper indicator for the small and medium-sized life insurance company at start-up period. Thirdly, the application of the Analytic Hierarchy Process and the Fuzzy Synthetic Evaluation Model make the indictor of performance evaluation more scientifically.