Study On Performance Evaluation Of Small-medium Size Insurance Companies In Start-up Period

After30years of development, the life insurance industry of China is developing rapidly. From1980to2011, the annual proceeds of insurance have increased from1.6billion yuan to917.364billion yuan, and the number of the life insurance company has rose to61in2010. This thesis define the China Life Insurance Company, the Ping An Life Insurance Company, the China Pacific Life Insurance Company, the New Chinalife Insurance Company, the Tai Kang Life Insurance Company and the PICC Life Insurance Company as the large life insurance companies, while the other life insurance companies are all defined as the small and medium-sized life insurance companies. There are many small and medium-sized life insurance companies in China, but compared with the developed countries, the number of the small and medium-sized life insurance companies in China are much more less. So the small and medium-sized life insurance companies in China have wide development space and potential. With the development of the economy and the insurance market, the structure of the life insurance competition entities will become more miniaturization and diversified.Because of the characteristic of the life insurance and the fierce competition of the life insurance market, the life insurance companies couldn’t have any profit until several years after they were founded. And the life insurance companies don’t have many capital and investment funds during the first few years when they are founded, so it isn’t suitable to use the traditional evaluation indexes which are based on the financial data such as the reserve ratio, the rate of return on investment, expense ratio to assess the efficiency of the small and medium-sized life insurance companies at start-up period.In order to assess the efficiency of the small and medium-sized life insurance companies at start-up period in a better way, to show the potential of these life insurance companies, and to help the regulators to supervise the companies, it is necessary to choose a suitable evaluation system for the new founded small and medium-sized life insurance companies. This thesis will use the three-stage DEA model to assess the efficiency of the small and medium-sized life insurance companies at start-up period.The first chapter of this thesis has described the background and the importance of this research. And then, this chapter has summarized the relevant researches about the evaluation of the efficiency of the insurance companies in China and in foreign countries.The second chapter has introduced the definition, characteristics and the management objectives of the small and medium-sized life insurance companies. This chapter discussed the standards of the small and medium-sized life insurance companies from three aspects:the number of employees, the general assets, and the premium incomes. And then, according to the life-cycle approach, this chapter has divided the life cycle of the insurance company into four periods:start-up period, growth period, maturity period and recession period, and has described the characteristics of each period. The last chapter of this chapter has introduced the management objectives of the small and medium-sized life insurance companies at start-up period.The third chapter has discussed the valuation methods and chosen a suitable method to valuate the efficiency. This chapter first has introduced the definition of the efficiency. And then, this chapter has discussed the Envelopment Analysis method, the Principal Component Analysis method, the Fact Analysis method and the Gray Relative Analysis method and shown the advantages and disadvantages of each method. At last, considering about the characteristics of the small and medium-sized life insurance companies in China and the principles and objectives of the evaluation, this thesis will use the three-stage DEA method to valuate the efficiency of the small and medium-sized life insurance companies at start-up stage.The fourth chapter has done some empirical research on the valuation of the efficiency. This thesis has chosen the number of the employees as the labor input index, the net asset as the capital input index, and the business expenses as the business input index. And then, this thesis has chosen the premium incomes and the incomes on investment as the output indexes. This thesis also has chosen the growth rate of GDP, the growth rate of the premium incomes of the life insurance and the annual rate of return of Csi300index as the environmental factors. The empirical research has been divided into three stages. The first stage is the traditional DEA stage, at this stage, this thesis has used the CCR model to valuate the efficiency of the small and medium-sized life insurance companies at start-up stage and has got the difference variables. The second stage is the SFA stage, this thesis has used the SFA model to assess the influence on the difference variables of the three input indexes when the environmental factors have changed. The third stage is the DEA after adjustment stage, with the original input indexes and the adjusted indexes which was got at the second stage, the thesis has used the CCR model to calculate the efficiency value of the small and medium-sized life insurance companies at start-up stage. According to the results of the empirical research, the last part of this thesis has given several relevant suggestions.