| Since the State Council sanctioned domestic insurance operation to resume in April 1979, insurance demand in China has been on rapid rise. The insurance premium has increased from 460 million to 431.81 billion, insurance penetration 0.1 percent to 3.4 percent, and insurance density 0.47 yuan to 332 yuan from 1980 to 2004. Thereinto, demand for life and health insurance has increased from 1.59 million in 1982 to 322.825 billion in 2004. It has taken up a dominant position since 1997 and risen in a fluctuated way. Demand for property and casualty insurance has increased from 460 million in 1980 to 108.98 billion in 2004. Although insurance demand has been developing rapidly, there are still problems that can not be ignored: Firstly, compared with the development of economy and people's living needs, its absolute amount is quite small; Secondly, the development of different insurance lines is unbalanced. Demand for life insurance accounts for a too large part of life and health insurance demand, while demand for accident injury insurance and health insurance takes a too small share. And three traditional lines, automobile insurance and third party liability insurance, cargo transportation insurance and business property insurance, occupies 80 percent of demand for property and casualty insurance. Accordingly demand for other lines, household property insurance, liability insurance, agriculture insurance and so on, does not boom. Thirdly, demand for insurance in different areas develops differently. Demand for insurance in eastern areas develops faster, while that in middle and western areas slower.In practice, many factors will influence insurance demand: From the macro point of view, these generally include three factors hereinafter. Firstly, economic factors. For example, income (includes income level and its distribution), saving and inflation. With the growth of a country's economy and income, people will come to pursue high-grade demand including insurance. Generally speaking, equitable income distribution helps torealize the common affluence. However, when it comes to underdeveloped economy, the inequitable income distribution may enhance people's purchasing power to a certain degree. And the rapidly increased saving can become insurance resource in the future. Secondly, social and cultural factors. For example, population and its structure, cultural and education level, risk and substitution for insurance. On one hand, explosion and aging of population as well as the prolonged life span in China will stimulate people's demand for life and health insurance. On the other hand, due to the traditional culture and planning economic system, people have formed the habit of saving to cope with risk. The dependency on implicit government security leads to people's little insurance consciousness. In addition, some large corporations prefer self-insurance, which restrains commercial insurance. Thirdly, legal factors and relevant policies. For example, legal environment, social security and policy of interest rate. The implementation of compulsory insurance can expand insurance demand. Although social security syetem will restrain commercial insurance in some sense because of the limited total resource, the improvement of it can also guarantee people's basic living standard, which will enhance their purchasing power for commercial insurance.Which of the above factors influence insurance demand in China in practice? And to what degree? This dissertation has used time seris and panel data to establish multi linear regression model to analyze how income, mortality, dependency ratio, education, social security affect life and health insurance demand from 1997 to 2004. The results show income (GDP per capita) and social security are the main factors that promote demand, and the estimation of parameters are almost the same in the two models. And panel data also indicates dependency ratio may have negative effect on life insurance demand. Besides, dividing 30 provinces, cities and municipalities into three groups according to their GDP per capita: high-level income group, middle-level income group and low-level income group, panel data shows: income elasticity of high-level income and low-level income are smaller than that of middle-level income group. The dependency ratio elasticity of demand is positive in high-level income group, whilenegative in middle-level income group and low-level income group. The social security elasticities of demand are positive in all groups and almost similar. In addition, because the factors influence different property and casualty insurance lines are quite different, this dissertation chooses only GDP and premium to analyze their mutual relationship. After cointegration test, I establish Vector Auto Regression model and Vector Error Correction model.Although there are many problems in China's actual insurance demand, and it has been constrained by many factors, it still has a great future. As to the life and health insurance, the rapid economic growth and increase of income will enhance people's purchasing power. And saving resource will turn into large potential insurance demand. At the same time, the expansion of middle class will improve consumption in China and promote potential insurance demand. As to the property and casualty insurance, changes of consumption structure, improvement of quality and increase of quantity of household property will definitely promote insurance demand in the future. In 2003, GDP per capital in China exceeds 1000 dollar, and that in some areas even exceed 3000 dollar. In terms of international experience, insurance demand for household property insurance and automobile insurance will increase in this period.Because S curve can describe the relationship of life insurance penetration and GDP per capita, this dissertation use Gompertz curve and Logistic curve to simulate their relationship. The results of two models show Gompertz curve can better describe this relationship and be used to predict future life and health insurance demand. Under some assumptions, Gompertz curve indicates life and health insurance demand will increase at an average rate of 19.95 percent; if the actual premium amounts to the average value minus one standard error, the growth rate will be 16.76 percent; if the actual premium amounts to the average value plus one standard error, the growth rate will be 24.18 percent. Under some assumptions, Vector Error Correction model indicates property and casualty insurance demand will increase at an average rate of 16.91 percent.Actual insurance demand is limited while it has great potential, so it necessary to carry out corresponding policies and measures to turn potential demand into actual demand from both demand side and supply side. Demand pushing measures include propagandizing for the importance of insurance to arouse people's awareness of it, asking for tax priority policies and implementing compulsory insurance when proper. Supply pulling measures include increasing the capital amount of insurance industry, improving the efficency of practice and innovating production as well as service. |
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