The Counter-cyclical Regulation Of Insurance Companies Of China Under The Circumstance Of Financial Crisis

Insurance companies are not only an integral part of overall financial system but also an important complement to social security system in our country. The outbreak of the2008financial crisis has made potential risks of the financial system especially financial regulatory failure dominant. After the financial crisis, Europe and the United States have launched their own financial regulatory reform programs to reduce systemic risks in the financial system by strengthening macro-prudential supervision on the basis of the traditional micro-prudential supervision. To alleviate the inherent pro-cyclicality of the financial institutions, the core content of the macro-prudential supervision is to conduct counter-cyclical supervision on financial institutions, thereby weakening the "positive feedback" to systemic risks of financial institutions. Counter-cyclical regulation is more used in commercial banks but relatively weak in insurance companies in both theoretical research and practical operations because various economic variables reflected in the contact between insurance companies and the real economy are lower than commercial banks in terms of sensitivity of the data.This thesis belongs to solve-the-problem oriented research. It firstly studies how insurance company strengthen macro-prudential supervision after financial crisis, by which the thesis explores how to build a comprehensive risk management system for insurance companies. In other words, this thesis is to study how to ensure the sound operation of the insurance companies from the "external" and "internal" perspectives. Among them, the "external" perspective, also the focus of the analysis in this thesis, is the analysis of insurance companies’ counter-cyclical regulatory issues; the "internal" focusing on the analysis of the insurance companies’ comprehensive risk management is an important complement to the counter-cyclical regulation of insurance companies. In the above analysis, the fund company will be compared as a reference object.The thesis studies counter-cyclical regulatory in the logical order of "pro-cyclical proof-the risk warning counter-cyclical regulation". First, we prove that the insurance companies indeed have pro-cyclicality in the overall perspective and investment business and identify the necessity for implementing counter-cyclical regulation in Chinese insurance companies; Subsequently, the thesis respectively conducts risk measurement study and early warning systems on insurance company’s overall investment business so as to accurately predict systemic risk to the business of insurance companies; Finally, the thesis discusses how to carry out counter-cyclical regulation in regulatory system of insurance companies in accordance with the needs of the counter-cyclical regulatory.Regarding the comprehensive risk management of insurance companies, the thesis analyzes the basis of Chinese insurance companies’ comprehensive risk management according to the background and significance of comprehensive risk management and the status quo of comprehensive risk management. From management framework, management processes and support systems, the thesis then analyzes the comprehensive risk management system of insurance companies.Finally, the thesis studies how to build a macro-prudential regulatory system covering insurance companies against the actual situation in China. On the basis of precise definition of macro-prudential supervision, it discusses in detail China’s macro-prudential regulatory framework from the perspectives of supervised entities, the organizational structure of the regulatory agencies and regulatory focuses.In this thesis, qualitative analysis and quantitative analysis methods are used to study the insurance companies’counter-cyclical regulatory issues. Qualitative analysis is mainly reflected in the generation of pro-cyclicality of insurance companies as well as international and domestic regulatory research status; the quantitative aspect is mainly reflected in the use of static panel data model, the validation of pro-cyclicality by AR (1)-TGARCH (1,1) model and the establishment of early warning model.The main conclusions are:First, China’s insurance companies have obvious pro-cyclicality in both underwriting business and investment business. It is therefore necessary to implement counter-cyclical regulatory; Second, early warning model built in this thesis can predict systemic risks for insurance industry and its investment business and provide effective support to the counter-cyclical regulation; Third, we conclude that we should reduce pro-cyclicality of the insurance companies and enhance the supervision of the counter-cyclicality in broadening risk coverage, improving the solvency index regulation, optimizing the investment amount and guarding structure management; Fourth, China’s macro-prudential supervision system should be established to cover all financial institutions and the implementation of counter-cyclical regulatory.The limitations of the researches in this thesis are:1, due to data limitation, the selected indicators of risk measurement of insurance companies and early warning are not the best.2, due to the lack of practical experience, there inevitably exists content that is difficult to achieve or disconnected with the reality in the proposed counter-cyclical regulatory and macro-prudential regulatory system. The relative research findings are to be tested.