Research About The Evaluation Of Insurance Industry Solvency Based On Principal Component Analysis

With the rapid growth of the economy and the progress of civilization, insurance industry as one part of the national economy plays a more and more important role in the social risk management. The first and the most important responsibility for insurance industry is to insure the loss caused by kinds of risks. So, having sufficient insurance solvency is the most important security to guarantee the normal working of insurance industry.Insurance solvency is that the insurance companies have the ability to pay for the loss caused by risks. Insurance is an industry with high incomes, and every insurance company hope to occupy a large part of the market, so they try their best to get business as far as possible. During the market competition, if some one of them happening the insurance solvency problem will damage the national economy and fluctuate the finance industry, as well as influence the steady society. So, our country pays more attention to the supervision of the insurance solvency.Our country published a rule about the management about insurance solvency in 2003, which makes a system to evaluate the solvency. And the system made in 2003 is the exclusive way to supervise our country’s insurance solvency. The content of the system include solvency ratios and indicators. The indicators have come from the IRIS system from American about more than ten years. So its insufficient comes about with the development of the economy and the changing of the national and international market. One is that the indicators covering is limited, the other is that the indicators can just evaluate the insurance company’s solvency alone and cannot appraise it comprehensively.To solve the two problems, the paper analyzes it from the influential factors about insurance solvency in view of the past studies, and cut the factors to four classifies, include property, profit, operate and business factors. Then transform these influential factors to indicators to enlarge the risk covering of them.After transforming these influential factors to indicators, I use GRA to analyze the data from Ping’ an, Renshou, Xinhua and TaiPingYang insurance company from 2010 to 2014 to find how these indicators influence the company’s solvency. And then using PCA evaluates the solvency comprehensively and provides the method and ways for the supervision organizations to improve their working efficiency.At last, in order to complete our country’s insurance solvency supervision, I put forward some other measures about policy, the supervision organization itself and insurance company. Just when these measures improve together can contribute better to the development of our country’s insurance industry.