Research On The Degree Of Insurance Coverage Of Insurance Companies And Its Consistency With The Orientation Of Solvency Supervision

Over the past 40 years since the resumption of insurance business,the reform of China's insurance market has made a series of great achievements.However,with the intensification of competition in the insurance industry and the volatility of capital investment return,some problems in the insurance industry have been exposed continuously.Chaos such as sales of investment insurance policies with high interest rate and radical investments are emerging in an endless stream.All these indicate that insurance has departed from the correct path of its development,which in turn has aroused the attention of the regulators and the insurance academia to the path of insurance development.Insurance should return to the origin of protection,which has become a hot spot for discussions among regulators,academia and industry.And it actually requires insurance companies to focus on the protection function of insurance.Therefore,by measuring the degree to which the insurance company performs the protection function,that is,the protection degree,it can be judged whether the insurance industry pays attention to the essence of protection.On the other hand,solvency regulation,as the core of modern insurance regulation,plays a key role in the behavior of insurance companies and the development direction of the insurance industry.As far as the relationship between the protection degree of an insurance company and its solvency is concerned,theoretically,from the perspective of the nature of solvency,performing well in solvency means that the insurance company has the ability to pay insurance claim and can provide timely and appropriate economic compensation when the insured encounters agreed risks,which in turn protects the interests of members of the society and promotes social stability and harmony.All above indicate that solvency itself has the nature of protection.From the perspective of insurance regulation requirements,solvency regulation is the core of the regulation model of "liberating the front-end and controlling the back-end",which should reflect the focus of insurance regulation.Therefore,under the current regulation background that focuses on the return of insurance to the origin of protection,it should reflect the regulatory requirements for the insurance protection degree.If protection orientation is included in solvency regulation,the back-end index of solvency can be used to supervise the front-end insurance business operation and capital utilization.And it can be truly realized that when the back-end is controlled,the front-end is released.Therefore,the solvency regulation should be consistent with orientation of protection degree.In response to the above situation,this article attempts to solve four problems:First,why is the protection function of insurance important?Second,on the basis of qualitative analysis of insurance protection function,how to construct a unified protection degree index of insurance company to measure the degree to which all insurance companies perform the protection function,in view of the inherent differences that may exist between property insurance business and life insurance business?Third,what factors are responsible for the differences in the protection degree among different insurance companies,and what effective operational and regulatory recommendations can be made to company operators and market regulators based on these factors?Fourth,does the solvency regulatory system of insurance companies,as the core of insurance company regulation,include the consideration of the protection degree?If not,what aspects should be improved?Regarding the first question,by combing through the development history of the status of insurance protection,this article finds that in the theoretical development process of insurance functions,no matter how scholars improve and modify,no matter what changes the industry undergoes during the development process,there is no doubt that all definitions,theoretical studies and regulatory policies emphasize that the essence of insurance is protection.The protection function is the most basic function of insurance.The insurance industry must always adhere to the origin of protection and cannot deviate from it,which is also the starting point and significance of the research in this article.Regarding the second question,focusing on the insurance protection function,this article proposes the concept of protection degree,constructs a multi-index comprehensive evaluation model by the entropy method to measure the protection degree of insurance companies and calculates the protection degree index of insurance companies in the sample years.Then,using the index,the insurance protection degree of property insurance industry,life insurance industry and the insurance industry as a whole are measured.The research results show that the protection degree index of property insurance companies is concentrated at a high level,and the protection degree index of life insurance companies differs significantly.Due to the inherent characteristics of property insurance business and life insurance business,the protection degree of property insurance companies is significantly different from that of life insurance companies,which means it is necessary to conduct separate researches.On the whole,the protection degree of foreign-funded companies is higher than that of Chinese-funded companies,the protection degree of small companies is higher than that of large companies.Moreover,the protection degree of China's insurance industry has been significantly enhanced during the sample period.The multi-index comprehensive evaluation model constructed in this paper is reasonable.Regarding the third question,the factors that led to the differences of protection degree among different insurance companies are analyzed through panel regression by using the results of the protection degree index of insurance companies obtained by constructing the model above,which is from the perspective of the characteristics of the company,the ownership structure and the board of directors.The research results show that on the whole,some factors such as years of operation,capital attributes,proportion of state-owned shares,professional background of the largest shareholder,the educational degree of the chairman and whether the chairman also acting as CEO have a common influence on property and life insurance companies.Regarding the focus of supervision,the research results of this article show some of the characteristics of companies with low protection degree index,such as market share,capital and other characteristics.The nature of property insurance business and life insurance business are different,so the factors that affect the protection degree of the two are mostly different.In addition,"insurance returns to the nature of protection" which is proposed by the insurance regulation can indeed cause insurance companies to pay attention to fulfilling the function of insurance protection.Regarding the fourth question,this article analyzes the theoretical relationship and influence mechanism between solvency and protection degree,and shows that the two should indeed be consistent.Then,by analyzing the solvency regulation system and protection degree of insurance companies layer by layer,the relationship between solvency regulation and orientation of protection degree is studied.The research results show that for all insurance,especially life insurance companies,the C-ROSS regulation runs counter to the orientation of protection degree constructed in this article.Such a risk orientation may cause insurance companies to pay more attention to investment than to protection in operation so as to increase their solvency adequacy ratio.In the long run,the insurance industry will seriously deviate from the essential path of protection.The reason that the C-ROSS regulatory system generally runs counter to the orientation of protection degree is that the solvency regulatory indicators more emphasize the confirmation of protection business risk.For the minimum of quantifiable risk capital,the calculation of the minimum of each individual risk capital is vague about the orientation of protection degree;the relative relationship between the minimum of each individual risk capital obscures the orientation of protection degree;the integration of the minimum of quantitative risk capital with the three types of the minimum of risk capital does not show preference for one or the other,and does not fully reflect the orientation of protection degree.These three reasons together lead to the deviation of solvency regulation from the orientation of protection.In addition,some insurance companies ignore the construction and compliance of risk management systems while focusing on protection.Based on all above,suggestions on company management and external supervision are proposed:First,the protection degree index of insurance companies designed in this article can provide regulatory agencies with a basis for regulation of the degree to which the insurance company performs the protection function.And the disclosure of more detailed data will help enhance the timeliness of regulation and research on the life insurance industry.Second,it is more reasonable to study the protection degree of property insurance and life insurance companies separately.When regulating the protection degree of property insurance and life insurance companies and proposing policies,regulators can conduct differentiated regulation based on the differences in factors between property insurance and life insurance companies.Regulators should also pay attention to the common factors during regulation.For example,appropriate attention should be paid to senior representatives of the industry and Chinese-funded private insurance companies.Third,the proposal of insurance regulation that “insurance returns to the nature of protection” has indeed aroused the attention of insurance companies to fulfilling the insurance protection function.The protection degree of insurance companies is closely related to regulatory trends.Thus,it is necessary for the regulators to promote the improvement of the protection degree of insurance companies,strengthen the regulatory orientation and ensure the function of insurance protection.Fourth,it is necessary to re-examine the C-ROSS regulatory system in the general direction,premise and environment that the orientation of insurance protection degree should be firmed up in the industry.In addition to the basic principles of risk orientation,the protection degree should also be used as the basic principle of solvency regulation.Fifth,in order to make the solvency regulation system have a more positive effect on the orientation of protection,it is considerable to give different degrees of preference when setting the weights or parameters of recognized assets,minimum of quantifiable risk capital,and minimum of control risk capital,according to the degree of relevance to the protection business.In addition to controlling the back-end to make solvency regulation consistent with the orientation of protection degree,various standards for protection degree should also be set in the front-end.For example,the protection degree should be highlighted in the definition of insurance products to distinguish them from other financial products.Sixth,some companies follow the nature of protection in operation and weaken the impact of risk from the root cause,but may also ignore the prevention and control of risk.Regulators should improve the construction of internal risk prevention and control system of those companies that lack risk management ability by centralized training and assistance.The company itself should also give adequate attention to the construction of risk management ability,and focus on the soundness of system and the effectiveness of compliance of solvency risk management.