Analysis On Influencing Factors Of Chinese Life Insurance Companies’ Solvency Based On Decision Trees Model

In recent years, Enterprise Risk Management framework has provided a new way for the stable operation of insurance companies and regulating risk of insurance regulatory, which is specially concerned by insurance industry at home and abroad. China Insurance Regulatory Commission has built a modern insurance regulatory system, and conform the development trend of international insurance regulatory, in which solvency regulatory is core, corporation regulatory and supervision of market behavior is basis. By summarizing the development of Chinese insurance solvency regulatory and analyzing the defects, the paper wants to explore the concept of Enterprise Risk Management in the field of insurance solvency regulatory in China, which is very significant to improve Chinese insurance regulatory system.The solvency is the ability to fulfill the repayment of insurance contract for life insurance companies when payout occurs. Solvency is the core of insurance regulatory, adequate solvency is the basis for sustained and stable operation of life insurance companies. CIRC printed formally the file of "Regulation on the solvency of Insurance Company and the Regulatory Index" in2003, which proposed two levels of supervision of for Chinese life insurance companies, namely solvency margin regulation and solvency early warning regulatory indicators. In accordance with the provisions, selecting the financial data between2002and2010of life insurance companies from "China Insurance Yearbook", and calculate the solvency early warning indicators of life insurance companies, then build the decision tree model of solvency influencing factors of Chinese life insurance companies, and analyze solvency sub-indicators how to affect solvency adequacy ratio in Chinese life insurance companies.The decision tree model reflects that CIRC should classify supervision on life insurance companies based on the difference of underwriting risk, especially focus on monitoring the life companies of higher risk."Recognition rate of asset-liability" has a greatest influence to solvency adequacy ratio, but "surrender rate" impacts worse. CIRC should distinguish the importance of regulatory indicators based on the degree of solvency sub-indicators affect solvency adequacy ratio, and focus on the regulatory indicators of higher influence. CIRC implements classification regulation for insurance companies and insurance regulatory indicators. to optimize the rational allocation of resources of the insurance supervision and improve the efficiency of insurance regulation. In addition, the decision tree model also reflects the overall solvency level of Chinese life insurance companies is not high, the statutory range of solvency regulatory indicators need to be improved.