Research On The Operational Efficiency And Influencing Factors Of Life Insurance Companies

Since 1982,the market capitalization of the life insurance industry in China has expanded,but most companies adopt a blind business strategy,making it difficult to achieve sustainable development.Now,the external environment has changed,the CBIRC required the companies to go back to their original aspiration,called "insurance is insurance".In 2017,after the CBIRC tightened its supervision,China’s life insurance companies have to improve their management capabilities.Meanwhile,the CBIRC has released foreign shareholding restrictions to the foreign companies,which means they can own all equity.The change would equal the opportunities and challenges for all companies,whether it is a Chinese company or a foreign company.For seeking the sustainable development,life insurance companies adopt to the demands of the times and better management strategies.Based on this one question,I measured the operational efficiency of 40 insurance companies by the three-stage DEA model.I also did the regression analysis about factors which decide the efficiency through the CLAD model.When I analyzed the result about the measured efficiency,I found a difference in efficiency before and after the adjustment.The adjustment result shows that the companies are less efficient.I deconstructed the operating efficiency,found that the reason is that scale efficiency was overestimated.In the regression analysis,I select the risk management,cost control,cancellation rate,return on investment and revenue share of traditional business as the factors which effect the operating efficiency.To better analyze the difference between Chinese and foreign companies,I did group regressions for the two types of companies.Comprehensive solvency adequacy ratio,return on investment,revenue share of ordinary life insurance,and revenue share of health insurance effect operating efficiency positively;organizational structure of risk department,operating expense ratio,cancellation rate,and nature of shareholding are significantly and negatively related with operating efficiency;for pure technical efficiency,risk management capability,operating expense ratio,and cancellation rate effect pure technical efficiency negatively,while investment return rate,revenue share of ordinary life insurance,and revenue share of health insurance effect pure technical efficiency positively;for scale efficiency,risk management capability and investment return capability effect the scale efficiency positively,cost management capability and revenue share of health insurance effect the scale efficiency negatively.Neither cancellation rate nor revenue share of ordinary life insurance is correlated with the scale efficiency.For the group regression results,risk management capability,cancellation rate and health insurance premium income share have different effects on Chinese and foreign investors.Finally,targeted policy recommendations are made for different market players.For Chinese companies,firstly,they should pay attention to high-quality development.Secondly,they must learn more advanced strategy to manage their risk.Third,they should pay attention to product innovation and service innovation.For foreign-owned life insurance companies,one is to strengthen localization.Second,to increase expansion efforts.Third,Chinese and foreign shareholders should strengthen partnerships and communication to reduce unnecessary differences and internal conflicts.For regulators,one is to adhere to strict regulatory guidelines.Second,foreign life insurance companies should be given appropriate policy support.Third,maintain a reasonable competitive market pattern.