Research On The Impact Of Foreign Insurers’ Entry On The Risk-taking Of Chinese Insurers

Today,China has become the second largest insurance market in the world.Attracted by China’s policies and good prospects for the development of the insurance industry,foreign insurance companies continue to expand their presence in the Chinese market and actively participate in the wave of development and reform of the Chinese insurance industry.This is both an opportunity and a challenge for Chinese insurance companies here.On the one hand,foreign insurance companies are more mature in terms of product development and operational management,which can provide some experience and reference for Chinese insurance companies.On the other hand,these advanced management tools of foreign insurance companies may also exert more competitive pressure on Chinese insurance companies and affect their risk-taking level in various aspects.Based on the relevant studies on risk-taking by domestic and foreign scholars,as well as theories on the motivation of foreign insurance companies’ entry,theories of financial openness and the theory of equity checks and balances,this thesis compares the entry history and development status of foreign insurance companies in China,analyses the impact mechanism of foreign insurance companies’ entry on the risk-taking of Chinese insurance companies,and the impact of foreign insurance companies’ entry on their risk-taking levels in terms of overall risk,underwriting risk and leverage risk are explored at a theoretical level,and the direction of the impact is found to be unclear.To further explore the actual impact of their risktaking,the thesis combines empirical evidence: the thesis selects data related to 28 Chinese property insurance companies and 25 Chinese life insurance companies from the 2012-2021 China Insurance Yearbook,and uses the share of foreign insurers’ total assets in the corresponding years as an indicator of the extent of their entry into China’s insurance industry,while introducing the Herfindahl index as a mediating variable to measure the fixed effects panel model was constructed to investigate the impact of foreign insurers’ entry on the level of risk-taking of Chinese insurers from the perspective of life and property insurance markets respectively.The findings of this thesis indicate that:(1)the entry of foreign insurers has a significant negative correlation on the overall risk-taking level of Chinese property and life insurers and a significant positive correlation on the underwriting risktaking level.(2)The entry of foreign insurers has a negative correlation on the leverage risk-taking level of Chinese property insurers and a positive correlation on the leverage risk-taking level of Chinese life insurers,but none of their effects are significant.(3)There is a mediating effect of the degree of market competition on the risk-taking of Chinese insurance companies.Finally,in order to enhance the ability of Chinese insurance companies to assume various types of risks and to promote the higher quality development of China’s insurance industry,this thesis makes the following recommendations at the company and regulatory levels.At the level of insurance companies,one is to establish and robust risk control mechanisms and self-monitoring mechanisms;two is to recognize the bottlenecks in development and improve the coping capacity;three is to accelerate the construction of talent teams and improve the overall quality of employees;four is to strengthen the use of insurance technology to enhance the risk bearing capacity of Chinese insurance companies.At the level of regulators,one is to reasonably introduce foreign insurers and guide the reasonable layout of foreign insures;two is to encourage foreign insurance companies to expand their operating areas;three is to optimize the competitive environment and strengthen cooperation between Chinese and foreign insurance companies;four is to strengthen international exchanges and cooperation to learn advanced regulatory concepts.