An Econormetric And Comparative Analysis On China's Property Insurance Companies

Since 1949 China's insurance industry has gone through many obstacles and also achieved brilliant goals.Both life and property lines grow rapidly;insurance premiums amount multiplies;new insurers appear;competence gets more and more tense and regulations becomes more and more thorough.Different with life insurance,property insurance tends to have a shorter responsibility span,and the amount and time of payments depends,thus bringing property insurers challenges.Currently,China's property insurers are confronted with a paradox:premiums keep growing while profits from writing business keep showing signs of volatility.Pursuing large scale premiums first,then using profits from investment to compensate writing deficit is a popular method among insurers.However,varying asset management skills makes profitability unbalanced.Once investment profit go down,insurers'solvency ability will be endangered and policy holders' rights will be in hazard.Since insurance has the ability of "Social Stabilizer",it is necessary to do a research on the risk management of insurers' writing business.First of all,this article focuses on vehicle insurance and non-vehicle lines,builds a basic writing profit model and takes risk-adjusted performance measures to map the risks during writing profits.Then a compare is made between three largest Chinese insurers,five medium and small companies and three foreign companies operating in China.Gauss Copula and student t Copula are used to map the dependence between different lines'loss ratios and proportions.Second,PICC is an example to illustrate how different operating strategies cause different results.Empirical study shows:(1)it is more likely to result in a positive profit when lines' loss ratios and proportions have dependence relation;(2)Chinese companies with larger scales tend to have larger writing profits and risk capital;foreign companies have smaller amounts of premiums comparing to Chinese insurers and a lower profitability.Based on the empirical results,following suggestions come up:(1)considering the dependence between different lines' loss ratios and proportions helps to improve property insurers' risk management skills;(2)improving vehicle insurance quality instead of quantity should be the key to a more legitimate composite operate ratio,leading to a profitable vehicle writing business;(3)foreign companies are bound to smaller premium scales,but they can achieve growth by taking reinsurance business on one hand,reduce vehicle insurance quantity and improve vehicle insurance quality one the other hand,to make deficit shrink.