Research On Internal Control Of Insurance Company

Insurance Company’s internal control construction in China is mostly driven by the administrative regulatory power. Regulators and insurers are undertaking a lot of exploration and innovation on internal control, but the internal control of insurance companies in China is still in a primary stage, there are still many problems. The existence of these problems, firstly because that internal control playing an important role in the risk management of insurance companies has not been fully recognized, execution of internal control is still stay on the paper. On the other hand, in a the long-term internal control is mainly driven by government regulators, and insurance companies perform internal control as the regulatory requirements. In order to reduce the cost of supervision and meet regulatory requirements, insurance companies set up the internal control system in the short term. Internal control is derived from the operating and management needs of the enterprise. The lack of understanding of the nature, will inevitably lead to the insurance company can not be efficiently organized the construction of internal control.Rising the internal control from the requirements of the external supervision to insurance company’s inside need, and making the internal control becoming truly effective means against all kinds of risks for insurance companies to improve the efficiency and benefit of the company, is the main purpose of this paperOn reviewing of the internal control theory and the insurance company’s internal control, we analysis the contract combination nature of the insurance company, and define the insurance company internal control connotation from the angle of nature of enterprise. On this basis we build on the theoretical framework of the internal control of insurance companies. With the new theoretical framework, this paper studies the relationship between the internal control and enterprise risk management, and the relationship between the internal control and insurance company’s corporate governance. Then this paper put forward main contents of the internal control system construction. The concrete content of the paper is as follows: The first part is the introduction, which include the researching background and significance, researching methods and ideas, researching framework and content of the paper, and the innovation and deficiency.The second part is introduction to the theory of internal control, which gives a comprehensive review on the development and evolution of internal control theory. COSO internal control framework and the mainstream is evaluated, and the insurance company in China the development of internal control theory are summarized.The third part is the insurance company framework of internal control theory, from the perspective of system economics, the nature of insurance enterprises are analyzed, and puts forward two points of the internal control of insurance companies. The first is that the internal control is derived from internal demand of insurance company enterprise essence, which ensure the existence of the insurance company as a governance structure better than market transaction on cost controling. The insurance company can effectively reduce the internal cost, obtain the cost advantage in the game with the market and trade company, and sustained business qualification by the internal control. The second is that the internal control which derived from the insurance company enterprise essence, should play the role of cost control in all the elements in the insurance company. Internal control of insurance companies not only need to control the daily operation and management of insurance companies, but also to the corporate governance, incentive and constraint, the information communication mechanism for effective control. In this paper are based on the insurance company framework of internal control theory, namely, the internal control of insurance companies should be fully reflected in the insurance company as the essence of business enterprises, which can help the insurance company to carry on the management to the management of risk, but also to the insurance companies operating efficiency and improve the operating efficiency of the function, theoretical framework of insurance company internal control consists of five elements:enterprise governance control, management control, operation control, information system and enterprise culture.The fourth part is the study of the insurance enterprise-wide risk management and internal control, the study of enterprise-wide risk management of insurance companies, and mainly elaborates the enterprise-wide risk management and internal control relations. Internal control and risk management have both connection and difference, enterprise-wide risk management and internal control is the insurance company means and effective tool. It is not only the means of risk management, but has its own unique mission and display space in the insurance company business development.The fifth part is the insurance company governance and internal control, and the relations of corporate governance and internal control were analyzed. Corporate governance in the process of internal control which is often regarded as the control environment. All the internal control is carried out in the governance structure of the company under the condition of a given. This is closely related with the development of internal control theory evolution. The modern internal control theory is developed in the developed countries such as the United States, which corporate governance and businesses in these countries are generally more standardized, and market and regulatory governance model of enterprises have strict requirements, so the external control can solve the problem of management control. But in our country, the development of insurance company governance theory and practice is not enough, and our insurance company has not established a perfect corporate governance structure, governance and control for the insurance regulation of corporate governance can not replace the insurance company’s internal control. Based on this point, must be taken into account to build management control of insurance company internal control system of our insurance company, but not merely considering the corporate governance as an environmental factor.The sixth part is system construction of internal control of the insurance company. On the base of analyzing the relationship between corporate governance, risk management and the framework of internal control theory of insurance companies, several main links in the construction of the internal control of insurance companies, the principle of target and internal control system were studied.In the seventh part the practice of internal control in of the practice of internal control in some domestic and foreign insurance companies are analyzed, which has carried on the analysis to our insurance company internal control problems in the construction, and gotten beneficial inspirations from the main foreign insurance group’s internal control construction practice.The eighth part is the conclusion, through the analysis of the nature of insurance company, we should re-examine and define of insurance company internal control framework, make the internal control developing systematic and comprehensive, and make internal control to become the external driving force to improve the insurance company operational efficiency and reduce the cost of the insurance company.