Quantitative Analysis And Actuarial Techniques Reaserch On The Vehicle Insurance Market-Oriented Reforms In China

As "leading insurance", vehicle insurance accounts for half of all property insurance in China. After China’s accession to WTO in December2001, vehicle insurance has become China’s first insurance released for foreign insurance companies. At the same time, marketization reforms of vehicle insurance clauses and rates is the first step towards full liberalization of the insurance market rates of China, which is obviously significant in guiding full premium rate reforms in China.From the perspective of economics analysis, vehicle insurance market follows the basic principles, such as the law of the value, the law of supply, the law of demand and competition theory. As the price of vehicle insurance, vehicle insurance rates plays an important role in regulating the supply of vehicle insurance market. Vehicle insurance markets are often attributed to the type of monopolistic competition or monopoly markets, while perfect competition or monopoly types of vehicle insurance markets are relatively few. Because of the special properties of vehicle insurance product itself, insurance markets in various countries of the world are mostly subject to government regulation. Meanwhile, there are some market failures in vehicle insurance markets. In this regard, government intervention played a protective role for vehicle insurance market and for vehicle insurance consumers.From a global perspective, insurance markets in the U.S., UK, Germany, Japan, Korea and many other countries have occurred vehicle insurance marketization reform. Since recovering vehicle insurance business in1980, China has undergone several reforms in vehicle insurance rates and provisions. The earliest reform traced back to1995. Pilot reform implemented in2001of Guangdong and nationwide reforms from January1,2003opened a large wave of reform in the past decade. So far, it has been an important topic for the regulators, industry associations, companies and research institutions of insurance. Despite a variety of influencing factors, vehicle insurance provisions and rates reform raises many problems, and its development is not so easy. However, vehicle insurance rates marketization is the trend.The original intention of this paper is to highlight the importance of actuarial system construction based on comprehensive analysis of China’s vehicle insurance market and in-depth research in actuarial techniques of ratemaking, in the hope of providing technical support for the vehicle insurance rates reforms in China.The full text is divided into eight chapters to conduct quantify analysis and actuarial technique studies. The first chapter is the introduction of the paper. Firstly, on the basis of the two aspects of social practice and mathematical research, the research background of my paper is introduced, as well as the significance of the study. After that, the domestic and international literatures and research in this area are systematically reviewed. Based on this, research ideas, structural arrangements and research methods are described, and the innovation of this paper is clarified.To study vehicle insurance provisions and rates market-oriented reforms of Chinese, we need a comprehensive understanding of relevant basic theoretical knowledge. In the second chapter, firstly, law of value, supply and demand theory, competition theory, game theory, market failure theory and government regulation of insurance market are introduced. Such knowledge lays a solid foundation for the analysis of the full text. Secondly, as to better implement the vehicle insurance market reforms in China, the development process of liberalizing reforms in European insurance markets, the U.S., the Asian and Australian insurance markets are described. Finally, the paper reviews China vehicle insurance market reform process in stage and objectively analyzes the main problems that appeared in the reform. The vehicle insurance ratemaking is emphasized, which is the foundation for the following study of actuarial techniques.The third chapter is one of the contributions of the full text. Regarding vehicle insurance marketization reforms of provisions and rates in China, from a qualitative aspect, many scholars have analyzed the necessity of vehicle insurance market-oriented reform, problems of different stages and proposed corresponding measures. However, there is little research on vehicle insurance market reforms from the perspective of quantitative analysis. In chapter three, in the first place, from the macro and the micro level of the market, the international and domestic environment of vehicle insurance business development in China is analyzed. Meanwhile, China’s vehicle insurance industry scale is illustrated from the vertical and horizontal point. After that, in order to digging factors that influence the development scale of China’s vehicle insurance, panel data models are used to conduct empirical analysis of factors affecting the development of China’s vehicle insurance industry. One conclusion obtained from the models is that the resident consumption, vehicle mileage and other factors have an impact on the development of vehicle insurance industry. Finally, the2003and the2006vehicle insurance market-oriented reforms are introduced into the panel models as explanatory variables. Another conclusion is that:the impact of vehicle insurance rates market-oriented reforms for vehicle insurance industry is obvious in China. Therefore, taking effective and reasonable measures to implement vehicle insurance market reform is particularly important.From chapter four to seven, in-depth studies are launched, focusing on actuarial models in vehicle insurance ratemaking, in the purpose of boosting the market-oriented reforms in China. In chapter four, the relevant basic concepts and processes of vehicle insurance ratemaking are illustrated. With regard to vehicle insurance classification ratemaking, individual risk experience ratemaking and No-Claim Discount, the traditional actuarial models are reviewed. The application of traditional models in the vehicle insurance industry of China are introduced and evaluated. In the fifth chapter, first of all, the paper systematically and comprehensively analyzes the structure of complex data sets, such as longitudinal data and hierarchical data. Secondly, random effect is introduced on the basis of the generalized linear models, after which the basic theory is explained, including parameter estimation method, model comparison and other issues of generalized linear mixed models. Then, using generalized linear mixed models, fitting models of the number of vehicle insurance claims are conducted. In perspective of introducing the random effects and layering the data, it is suitable to use hierarchical models to analyze the observational data. Application of hierarchical linear models and generalized hierarchical linear models in vehicle insurance ratemaking of China is in the blank stage. Finally, the paper gives the theoretical description and the research prospects of these models. In the sixth chapter, the generalized linear models are expanded to generalized additive models, which in fact belong to non-parametric models. The theory of GAM models and their applications in vehicle insurance ratemaking are studied. Using a set of vehicle insurance claims data, it is found that generalized additive models are more flexible and accurate than generalized linear models on the analysis of data sets with continuous explanatory variables. In the seventh chapter, compound distributions, mixture distributions and GAMLSS models are described, and an overview of application of Bayesian method in vehicle insurance ratemaking is presented.The eighth chapter concludes the paper, which presents the research findings, policy recommendations and future directions. First of all, several suggestions related to China vehicle insurance reforms in provision and rates are proposed, and it gives prominence to building actuarial systems.