Insurance Company Funding Liquidity Risk Analysis And Countermeasure Study

In April 2017,China Insurance Regulatory Commission issued?The Notice on further strengthening the insurance business risk management by CIRC?,and the Notice pointed that Liquidity Risk management ranks the first among the nine Risks Management.Capital liquidity risk management is of great significance to the sustainable and healthy development of Insurance Finance,which is an important means of resolving the solvency crisis.The methods for recognizing,measuring,assessing,monitoring,preventing and resolving liquidity risk are one of the most significant subject in the Insurance Industry.Most of insurance companies in China lack of relevant system and riskmanagement in raising funds,foreign investment,capital utilization and distribution of retained earnings.Therefore,it should be taken risk management into account in case of unbalance in operation management.The paper regards the domestic insurance industry as the research object,and utilizes advanced related theories and successful experiences to define the meaning of liquidity risk and its forms of expression.The qualitative analysis based on current material demonstrates that the reason for insurance company's liquidity risk is various,including unscientific financing scale and structure,failed to diversify risk,inability to rating,unreasonable cost allocation,and high loss ratio.The article describes and estimates 8 financial indexes,such as the surrender rate,comprehensive loss ratio,comprehensive ratio,return on investment,reserve fund rate of change,through selecting 57 life insurance companies as samples,and using the financial data in?Chinese Insurance Statistic Yearbook 2016?.Additionally,the paper utilizing the software,SPSS23.0,to analyze the three indexes which affect the insurance company's liquidity risk.The research finds out five conclusions.Primarily,if the profitability factor contributes larger percentage,with that the liquidity ratio and the investment yield index have better explanation ability,it shows the significance of the liquidity riskmanagement in operating the funding investment for the insurance company.In addition,the score of management factor illustrates that medium and small insurance company ranks in front of large insurance company,which means that the medium and small insurance companies have better liquidity risk control in claim service.What is more,the lower score in business quality factor results in potential liquidity risk.Fourthly,based on the final rank,each life insurance company emphasizes differently.Last but not the least,there is a correlation between each factor,the insurance company requiresystematic and comprehensive risk management in funding liquidity risk management.According to the research conclusion,this paper lists a series of reasonable measurement based on the real data.Insurance companies should improve sensitivity and insight into financial risks,and strengthen operation management.Particularly,the company should take control and manage liquidity riskeffectively,via reviewing various kinds of insurance business,regularly screening financial data,standardizing the depreciation reserves,crack down on bogus claims.