Internal Control System Construction Of Chinese Life Insurance Company

Since 2006, China Insurance Regulatory Commission has promulgated a series of regulations about Chinese life insurance companies'internal control, which means the governor of insurance industry is attaching more and more importance to internal control construction than ever before. Under the circumstance,'Internal Control System Construction of Chinese Life Insurance Company'is a worth concerned issue which has double meanings from the angles of both theory and practice.The whole thesis is categorized into five chapters and the content of each chapter is introduced in detail as below:At the beginning of Chapter One, I sum up the fundamental internal control theory in four developing phases until now separately. The most authoritative theory about internal control is'Internal Control-Integrated Framework'theory which was the research outcome from American Committee of Sponsoring Organization of the Tread-way Commission in 1992. This theory claims internal control consists of five basic elements, i.e. control environment, risk assessment, information and communication, control activities and monitoring. According to the theory, I conclude the connotations of internal control of life insurance companies and try to find out the deficiencies of this theory by comparing some new research achievements abroad. In the end of this chapter, I briefly analyze the operation characteristics of life insurance companies and point out what kind of risk the companies should make use of internal control system to manage in daily operation, which, I think, makes for promoting the pertinence of the system construction of life insurance companies.Chapter Two focuses on the experiences the Chinese life insurance companies should conclude from the former cases before carrying out the concrete measures of constructing the system so as to avoid following the same old disastrous road. I pick up two typical cases-China Aviation Oil Singapore Ltd. bankruptcy case and Metropolitan Life deceptive sales case-to summarize some key points on which our life insurance companies should emphasize particularly in the process of internal control system construction.Chapter Three mainly discusses two aspects of how to prepare for constructing internal control system in Chinese life insurance companies. On the one hand, I analyze the necessity of constructing and perfecting the system as soon as possible, which includes explanations of why the companies should establish the system from the point of view of the companies'stakeholders and the deficiencies of current internal control situation. On the other hand, I put forward the targets the internal control system should realize and the main principles the life insurance companies should comply with.Chapter Four and Chapter Five are the core parts of the thesis. In Chapter Four, according the sequence of five basic elements of internal control, I discuss how to build up a complete internal control system from the standpoint of an integral Chinese life insurance company. Concretely speaking, first of all, the company should optimize its control environment from the aspects of the quality and moral standard of the board of directors and executive staff, the enterprise culture, organization and structure of the enterprise, human resource policy and so on. In addition, the company must establish a risk assessment mechanism to recognize and analyze the risk the internal control system should manage. Thirdly, with the intention of guaranteeing the effective and sufficient communication between departments inside the company, it is necessary to design some proper ways to collect, manage and transfer the information from inside and outside. Beside, the company must project and exercise multifarious control activities such as the power limit control, the detachment of inconsistent jobs, the protection of assets etc. Lastly, the company must attach great importance to make use of self-check system to supervise the status of company operation. The self-check system comprises consecutive monitor towards all staff and internal auditing superintendence.Chapter Five is dedicated to probe into the methods of how to infiltrate the five elements of internal control into the four main management processes including policy operation procedure, financial accounting transaction, life insurance funds investment and custom service process.I suppose there are several original points in the thesis. Firstly, I analyze the connotations and deficiencies of the'Internal Control-Integrated Framework'theory. Secondly, I research the meanings of constructing the internal control system in life insurance companies from the angle of the companies'stakeholders and enrich the principles of the system construction. Thirdly, from the viewpoint of Chinese life insurance companies, I discuss how to construct a complete internal control system and then try to apply the elements of internal control to the main operation processes.