Research On The Impact Of Internet Insurance On The Operational Efficiency Of Life Insurance Companies

The rapid development of the Internet in China has brought transformation and upgrading opportunities to many industries.Traditional life insurance companies that rely on agent channels have also started to reach out to the "net" and continue to innovate sales channels to develop Internet insurance business.The spread of the COVID-19 has put traditional life insurance premium growth under pressure,providing an opportunity for more companies to join the transformation and upgrading.In recent years,more and more scholars have taken Internet insurance as an important influencing factor to study its effect on the operating efficiency of insurance companies,and most of the studies have concluded that it can significantly improve the operating efficiency of insurance companies.However,from the literature,most of the current studies focus on qualitative or case studies,and some of the existing empirical studies are only on general insurance companies or compare personal insurance companies with general insurance companies.Therefore,it is necessary for this paper to investigate whether Internet insurance can improve the operational efficiency of the personal insurance industry alone.Firstly,this article analyzes the definition and advantages of internet insurance from a theoretical perspective,and then analyzes the inherent meaning of company operational efficiency.Using value chain theory,the basic activities of life insurance companies are roughly divided into five stages: insurance product development,insurance product marketing,policy management,insurance fund utilization,and customer service.The impact of internet insurance business on each stage is analyzed.The theoretical analysis concludes that the Internet insurance business can help life insurance companies save a lot of time and personnel costs in all aspects of their operations and improve their operational efficiency.Secondly,the total factor productivity index of calculating business efficiency is total factor productivity,and this paper selects the sample data of 61 life insurance companies in China from 2014 to 2019,and uses the DEA-Malmquist index to calculate and analyze the total factor productivity of each life insurance company and its decomposition of technological progress index and technical efficiency,as well as the pure technical efficiency index and scale efficiency index further decomposed by the latter.The calculation results show that the operating efficiency of each life insurance company is on the rise,with an average annual growth rate of 11.07%,indicating that the operating efficiency of life insurance companies is in the process of continuous improvement.The overall operating technology efficiency index of life insurance companies is in the process of decline,with a decline rate of 0.9%,while the overall technological progress index is in the process of rising,with an increase rate of 2.5%.Pure technical efficiency increased by 0.5%,scale efficiency decreased by 1.4%,and the scale efficiency value was much larger than the pure technical efficiency value,and the decline in scale efficiency was the main driving force for the decline of technical efficiency.Thirdly,based on the above calculated business efficiency index,the individual time double fixed effect model is used to conduct empirical research.The results show that the opening of Internet insurance significantly improves the total factor productivity of life insurance companies,and has a positive impact on the technical efficiency and technological progress index of total factor productivity decomposition.In addition,increasing financial leverage can improve the operational efficiency of life insurance companies to a certain extent;The larger the company,the higher the operating efficiency of the company;The increase in operating expense ratio will reduce the operating efficiency of life insurance companies;The higher the labor productivity,the more efficient the operation of the life insurance company.From the heterogeneity analysis of property rights structure,educational composition,and group companies,the following conclusions can be drawn: the opening of Internet insurance only has a positive effect on the operating efficiency of foreign-funded life insurance companies,but has no obvious impact on Chinese-funded life insurance companies;In companies with a high proportion of bachelor’s degree or above,the opening of Internet insurance has a significant effect on improving business efficiency;The opening of Internet insurance has a significant positive effect on the operational efficiency of noninsurance group companies.Finally,combined with the theoretical analysis and empirical test of this paper,comprehensively considering the current situation and existing problems of China’s life insurance industry,based on the perspective that Internet insurance business can promote the operational efficiency of China’s life insurance industry,relevant countermeasures and suggestions are put forward from the perspectives of life insurance companies and regulatory authorities.