| On Dec 19th,2005,CIRC came out with《China Life Insurance Mortality Table(2000～2003)》,and declared that from then on life insurance company could choose death rate while pricing. This meant that CIRC gave more right for life insurance pricing. This is a very important step in rate marketability.But how to get flexible rate to adjust to this trend for companies? Traditional pricing method including additional premium method and gross premium method cannot do it very well. Though asset share pricing method can achieve expectant profit by adjusting actuarial assumption and making rational price, it needs so many disposals of indexes and complicated calculation that it is very difficult to apply to practice. Rigid price means serious pricing risk.Therefore, how to analyze and manage pricing risk needs attending for both companies and academic experts. This groping research is just based on this problem.1. Ideas and aims of this researchI combine asset share pricing method with statistical method and establish four regress models between actuarial assumptions and profit goals. The models omit a lot of medial process without effecting veracity and solve a hot potato by simple models. The author sum up some actuarial theory before regress, such as survival function, calculation of premium, evaluation of reserve, selection of actuarial assumption, and so on. The aim is to prepare for latter research and analysis. After demonstration,author studies some risk factors of asset share pricing method and puts forward relevant strategies. At last, I explain some results and shortages consisting in this paper. The hope is to provide a practical method of pricing and put forward some new theoretical problems for asset share pricing method.It has two aims. The first one is to research pricing risk and management measures. The second is to appeal to more actuarial experts to study pricing theory and improve it forward. 2. Content and frame of this paperThe research can be divided into seven parts:Part 1: related researches. This is primarily an analysis of the current situation of actuarial theory research. The current researches about pricing theory focus on property insurance field. Life insurance pricing study is absent because it is mainly on life table. However, the author still read a lot of references,analyze some models related to asset share pricing method and hope to lay the theoretical foundation of this study.Part 2: developing and pricing process of life insurance product. From the practical point of view, this part sums up some major processes of product development and pricing and lays a good foundation for the next part of this theory and the latter asset share pricing method study. Through this study, we found that pricing is certainly not merely a theoretical problem. In practical work it has been subjected to many factors.Part 3: research about pricing theory and traditional method of life insurance. On the basis of the last practical study, this part mainly study from the theoretical point of view. First, some important life insurance actuarial theory, including life table, survival function, pure premium, net premium reserve and cash value, are summed up. Then I analyze and compare the two traditional pricing methods.Part 4: principle and development of asset share pricing method. This part is a very important theoretical study of this paper. I introduce asset share pricing method and basic pricing principle. Then I also analyze differences and advantages between asset share pricing method and the traditional pricing method, and hope more companies to adopt asset share pricing method for pricing and controlling pricing risk.Part 5: an Empirical Study of asset share pricing. The part is further research about last theoretical analysis using statistical methods and data. I discuss some important factors influencing on "four-ratio" and assume "four-ratio" and a datum mark. Furthermore, I get regress models between profit aim and "four-ratio" by combining asset share pricing method and statistical method. At last, practical value in pricing and risk management are analyzed.Part 6: study of pricing risk and management countermeasures. In this part, in allusion to the former theory and empirical studies, I analyze primary risk factors in asset share pricing method and suggest a number of corresponding measures to control risks. I hope that insurance companies actually pay attention to preventing these risks and take appropriate measures in advance.Part 7: research findings and deficiencies. At the end of the article, I summarize the results and significance of this study. Of course, due to objective conditions, there is still much room for this paper to improve. Despite these shortcomings, I believe that this study is valuable, not only can provide some practical methods for the future, but also put forward some new problems for the future theoretical studies and promote the development of pricing theory.3. Value and innovations of this researchThe research has some important value as follows: (1) New pricing method can help companies get flexible rate and achieve expectant profit target. So solving complex problem by using simple models is successful; (2)It provides companies for an method to analyze risk. Different companies can use these models to test cash flow according to their own situation; (3) This article summarizes the original pricing model, compares the differences between them and studies pricing theory exploringly. The hope is to attract more professionals to research pricing theory and promote the quick development of theory forward.Compared to other related researches, this discussion has two improvements: First, Some scholars have examined the relationship between premium and profit targets. But calculation of premium still needs the actuarial assumptions and assuming premium unchanged while actuarial assumptions changed is contrary to theory. Therefore, this paper omits the intermediate index namely premium and establishes functions between actuarial assumptions and profit targets directly. Pricing theory is developing and improving. Second, it studies the impact on profit targets along with changes in actuarial assumptions continuously. That is to say, pricing "from a point to a line" comes true.Given so large amount of data, complexity of data processing, lack of research and analysis related to the field and the limited capacity of the author, the text has failures and shortcomings inevitably. I wish that my dear teachers and students criticize it and give good suggestion. |
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