A Study On Risk Evaluation Of China Property Insurance Companies Based On Rough Sets

Since the refom and opening-up, China insurance industry has experienced a huge development. With the development of economy, insurance companies have to face more and more risk, but their risk management sense is not strong and many useful technologies and methods in risk management field are not paid enough attention. In recent years, with the purpose of speeding up the construction of risk management in our insurance industry, China insurance supervision institution has issued a number of laws and regulations. To meet legal requirements, our insurance companies need actively adopt advanced risk management theory from developed countries to strengthen our own risk management construction. As a new risk management theory, the Enterprise-wide Risk Management theory (ERM) has got more and more attention from the international insurance industry and successful practice showing that ERM is effective to manage all kinds of risk from insurance company and can promote the enterprise value. Therefore, this article will establish China non-life insurance company’s risk evaluation model based on ERM. With the help of the risk evaluation model, non-life insurance companies can identify their own major potential risk factors and insurance supervision institution can also supervised those companies whose risk management construction lag behind, so as to ensure the stable development of the whole industry.This author accomplishes the following tasks. Firstly, the paper introduces the ERM theory and compares it with the traditional risk management theory. By the comparison, the conclusion that ERM is an inevitable trend of risk management can be drawn. Secondly, since risk evaluation is an important aspect of risk management, it is necessary to establish a risk evaluation model of China insurance companies. The author sets up a risk evaluation index system based on China insurance regulatory index system and ERM theory. This risk evaluation index system is in line with non-life insurance company risk characteristics and can be used as the basis of the risk evaluation model. In view of the advantages in dealing with the high dimension reduction and index weight calculation, the model is based on rough sets. Finally, the model is applied to our property insurance companies, and some useful conclusions are drawn. The property insurance company needs to focus on several financial ratios, such as the return ratio of assets, return ratio of investment and so on. In addition, the large state-owned property insurance companies are generally in good condition.