Empirical Research On Performance And Efficiency Of Chinese Current Property Insurance Industry

Insurance is a risk-sharing approach with compensation, investment and financing and social management functions, which play an important role in stabling economic life, providing security for the community, alleviating social contradictions, coordinating social relations, promoting technological innovation and preventing high-tech industry from risk. Since its re-operation in 1980, China's property insurance industry has developed rapidly, and has became one of the fastest growing industries.The efficiency, examining the relationship between input and output, is a production concept. Performance, as summary of producing and operating activities, is a value concept, usually displays for the abilities of profiting, solvency, operating and developing and others. Typically, the best achievements connect with the best efficiency, efficiency as performance's internal impetus, so performance cannot separate from efficiency. Only with high efficiency, enterprise can keep the best and long-lasting performance.With the full liberalization of China's insurance market, foreign companies have entered our market gradually, then the domestic property insurance companies will face unprecedented competition, therefore, performance and efficiency become an unavoidable problem for the companies. Researching performance and efficiency can not only clearly let us understanding the current operating conditions of property insurance industry but also providing corresponding recommendations for problems, which has extremely important practical significance in improving the comprehensive competitiveness.The paper, using insurance and financial accounting and other knowledge, utilizing statistics, operations research and econometrics and other methods, analyzed 44 property insurance companies' performance and efficiency and respectively compared the national and the regional, Chinese and foreign firms' performance and efficiency. When researching performance, the paper took use of factor analysis methods, after considering the company's profitability, operational capacity, solvency, development ability and others, finally selected 16 indicators. When researching efficiency, the paper using data envelopment analysis method, and selected paid-up capital, number of employees and the expense as input variables, selected the premium income and investment income as output variables. In the final chapter, the essay made use of correlation analysis and regression analysis to demonstrate the empirical relationship of performance and efficiency for the current property insurance industry.The results of performance studies showed that the property insurance companies displayed unbalanced profitability, profitability, operational capacity, solvency, development ability and others, even a big difference. The national firms' performance is superior to the regional ones, the both had no difference in the abilities of profiting, investing, business developing and risk management, the former had better operational ability and solvency than the latter; the latter had a better growing ability than the former. The Chinese companies'overall operating performance was better than foreign companies, there was no significant difference in profiting, growing, investing, business developing and risk managing capabilities, compared with the foreign companies, The Chinese companies had better operational ability and solvency.By analyzing efficiency,we found that the current property insurance industry's technical efficiency is not high mainly due to inefficient pure technical, which caused by low internal management, product development and innovation capacity, and the most inefficiency companies existed problem of insufficient investment yield. The National and regional property insurance companies had no significant difference in pure technical efficiency, but the former performed more efficient than the latter on scale, so nationwide companies showed more efficient than the regional companies on technique. The Chinese companies had the same pure technical efficiency with the foreign ones, but compared with the foreign companies, the Chinese companies was more efficient on technique, for they owned higher scale efficiency.The empirical relationship between performance and efficiency indicated that the Chinese property insurance companies'performance related with the pure technical efficiency, and had nothing to do with the scale efficiency, but the foreign companies showed the opposite conclusion.In order to improve the discovered problems, the paper provide some corresponding suggestions such as firms that operating at decreasing returns to scale should try to control the business scale. All companies should insist on transforming its business development from an extensive to an intensive pattern; should optimize the usage of insurance funds; and pay more attention to balanced development and so on.The innovation of the paper lies in:on the one hand, the paper took use of factor analysis method to evaluate the sample companies'operating performance, which avoided one-sided conclusions from single financial indicator; on the other hand, based on the Data Envelopment analysis method, the paper not only estimated the companies' efficiency, but also provided the efficiency improvements' direction and size for the inefficiency companies. However, because of objective reasons,the main disadvantages of the paper is that the research objects'time intervals is short, so that we cannot observe the developing trends, especially when measuring the impact that efficiency exerted on the performance, the paper use data of only 1 year, so the conclusion may not really accurate.