The Earnings Dilemma Of Small And Medium-sized Property And Casualty Insurance Companies And Its Countermeasures

Since the enforcement of the reform and opening up policy, China’s economy has developed rapidly. The awareness of insurance has been strengthened, and the insurance industry has been considerably developed, assets scale gradually been expanded and its social status increased. At the end of2011, the National Property&Casualty Insurance Company original premium income is477.906billion Yuan, with an increase of18.68percent year-on-year, accounting for33%of the total revenue of the entire insurance market. P&C industry still maintained a better economic efficiency. In2011, the industry achieved a net profit of19.4billion Yuan, with a year-on-year increase of22.01%, including underwriting profit of17.665billion Yuan, with an increase of9.241billion Yuan. Market structure has also been changed. The number of property and casualty insurance companies was59, including38companies owned by Chinese entrepreneurs and21foreign companies.Although small and medium-sized property insurance companies accounted for the majority of the property insurance market, their profitability was not optimistic. From the statistics of the end of2011, it can be seen that the industry net profit was19.4billion Yuan. The large property insurance companies, as People’s Insurance Company of China, Ping An Insurance Company, Pacific Property Insurance Company accounted for nearly87%of the net profit of the industry and reached$168billion.27other small and medium-sized property insurance companies still remained at a loss; the sustainable, healthy and scientific development of the P&C industry is still worrying. The considerable development of property Insurance is inseparable from the important contribution of small and medium-sized property insurance companies. In the property insurance market, small and medium-sized property insurance companies can not play a leading role in underwriting capacity and technology, but a large number of small and medium-sized insurance companies has a stronger ability to innovate and behave, playing a positive role to improve the property and casualty insurance market in China.The objects of this paper are the profitable predicament of small property and casualty insurance companies and its countermeasures. In recent years, small and medium-sized property insurance companies have developed rapidly, taking up the market share increasingly, with branched spreading the whole country gradually. However, small and medium-sized property insurance company’s profit situation is still not optimistic. The earnings, as a basis for sustainable development of small and medium-sized property insurance companies, have become the focus of this article.On the basis of the status quo of the researches of domestic and foreign scholars, this article uses the specification analysis and case studies as well as the method of combining qualitative analysis to analyze the plight of the profitability of small and medium-sized property insurance companies from both internal and external dimension. The internal angle refers primarily to small and medium-sized property insurance companies’ own problem. The internal problems in small and medium-sized property insurance companies lie incomprehensive cost being too high, single product structure, poor reputation, inefficient claims, weak internal corporate governance and so on. The external angle mainly studies the influence of regulatory environment and tax policy on the profitability of small and medium-sized property insurance companies.The main content of the article is divided into the following fore sections:The first part is mainly involved in previous research synthesis and related theoretical introduction, including the introduction and first chapter. The introduction mainly states the background and significance of the research described in this article, research and analysis of home and aboard, the ideas and methods of the study, and possible innovations and deficiencies. On the basis of previous analysis, the first chapter defines the characteristics, range, economic role of the small and medium-sized property insurance companies, and make specific classification.The second part mainly studies the situation and reasons for plight of the profitability of small and medium-sized property insurance companies, which include the internal ones and the external ones. The internal problems in small and medium-sized property insurance companies lie incomprehensive cost being too high, single product structure, poor reputation, inefficient claims, weak internal corporate governance and so on. The external angle mainly studies the influence of regulatory environment and tax policy on the profitability of small and medium-sized property insurance companies.The third part mainly discusses the profit model in small and medium-sized property insurance companies, points out the problem lying in the profit model, and put forward policy suggestions combined with successful examples.The forth part will put forward policy suggestions from different angles, according to the internal and external reasons for plight of the profitability of small and medium-sized property insurance companies discussed in the second part.