Group Life Insurance Pricing Basis And Methods Of Analysis

Group life insurance comes from Employee Benefit Plan. Now it isone of the important businesses of insurance company. Since 1996, theimportant role of group life insurance has been replaced by individuallifeinsurance in China. According to the WTO promise, foreign insurancecompanies acquired the operation right to be engaged in group insurancein China's market in December, 2004.Every foreign insurance companyconsiders group insurance as the weakest in China's insurance market.They hope that group insurance could help them to win over marketshares. In such condition, China's insurance companies take positiveattitude. But China's insurance business is still in elementary stage.Group insurance business lacks theoretical support and operationalexperience. On the basis of pricing of group life insurance, I choosegroup long term life insurance as the research subject. In view of existingsituation, I offer some methods of improvement, hoping to contribute tothe development of China's group insurance business. On the basis of group long term life insurance pricing process, thedissertation puts particular emphasis on group risk. The dissertationfollows specific regularity of group long term life insurance and putsforward methods of improvement on pricing. The article consists of anintroduction and 4 chapters. The introduction discusses the necessity of research from threeperspectives: the present characteristics, competition situation, and theproblem of group insurance operations. At the same time, it introducesresearch methods used, the general design, logic structure,and the scopeof research. Chapter 1 is "the pricing base of group insurance". It is also thepricing base of group long term life insurance. First, it analyses the basicpricing principle that is different from the pricing process of personalinsurance. Considering the importance of pricing assumption and thecharacteristics,it zeroes in on the discussion of three factors :macro-economic environment, death rate,and interest. These factorsinfluence pricing. Then, it introduces method used to test rationality ofpricing assumption. The method is to draw support from contingencymargins. At the same time, from the other side, it analyses other factorsthat influence premium. This chapter is the foundation of the article. Chapter 2 is "the mortality table of group insurance pricing."It isalso the mortality table of group long term life insurance. The mortalitytable of group insurance serves pricing. So the mortality table is the baseof pricing. The chapter introduces the basic concept, estimation andsuggestions. Considering the difference in group death rate and personaldeath rate, it isn't rational to use the same mortality table in pricing.Group insurance operation specially needs group mortality table fromthree perspectives:current situation,the need of standardized operation,the need of specialized operation. The chapter also analyses the processof drawing up the mortality table. And it focuses on analyzing exposurecount that is an important factor of mortality table. Chapter 3 is "interest analysis of pricing of group insurance". Theperiod of group long term life insurance is very long. So market interest isconstantly changing during this term. But predetermined interest doesn'tchange during this term. The interest risk comes from this difference. Thechapter analyzes the importance of interest risk in pricing. Because thereis intimate relationship between predetermined interest and realisticinterest. The chapter analyzes the ways of investment in China and thedevelopment of interest from the other side. Chapter 4 is "the methods of group long term life insurance". Firstly,it evaluates the current pricing methods and draws a conclusion thatinsurance companies have the excessive right of pricing. China InsuranceRegulatory Commission lacks necessary supervision over groupinsurance pricing. According to international convention,premium is notcompletely market-oriented. It needs supervision from InsuranceRegulatory Commission. So we put forw...