The Study Of Insurance Agencies’ Business Operational Risk Management In Life Insurance Companies

Since1979, Chinese insurance companies have fully resumed domestic business. Domestic insurance industry has made a great progress and become one of the highest developing industries. As the bond between insurer and insured, insurance agencies largely supplements and extends business operational channels, decreases the business operational cost, provides insured with diverse insurance services positively, realizes the win-win of insurance companies, insurance agencies and insured and has a positive role in thriving insurance market, improving market system and serving development of economy and society.The business operational risk of life insurance companies’ agencies is emerging while the business of insurance agencies is developing fast. In2013, the event about the manager of Shanghai Fanxin Insurance agency company, Chen Yi, who fled with a lot of money, shocked both inside and outside of insurance industry and bring immeasurable loss to its cooperative life insurance companies. This case exposes life insurance companies’ lack of the operational risk management of insurance agencies’business and sounds the alarm bell of business risk prevention of life insurance companies’agencies.Early on, people have realized the business activities must be accompanied by risk and insurance industry whose main business is managing risk emerged because of such sense. In developed country, both academia and large enterprises have explored and studied the business risk and relative management method so that the risk management theory have been developed rapidly and transfer from traditional stage to comprehensive stage. But for research of insurance companies’risk management, especially life insurance companies, it just starts from nearly10years age in both domestic and abroad and the research about insurance agencies’ business operational risk is quite rare. In practice, the events about insurance agencies’ business operational risk happen frequently and cause great economic and reputation loss. It highlights the urgency and necessity of insurance agencies’ risk management research. The author thinks it will be less scientific and effective to assess risk through referring bank industry’s operational risk econometric model and manage insurance agencies’business operational risk based on setting aside economic capital under the condition of being short of basic data and management experience. Analyzing the characteristics of insurance agencies’ business operational risk, managing the existing problems, exploring the reasons and proposing targeting suggestions have more theoretical and practical value.This paper will study the problems of insurance agencies’business operationalal risk from life insurance companies’perspective based on the practical situation of life companies and insurance agencies in Guangxi.This beginning part is the introduction, which mainly elaborates the research background, approach and methods, innovation and inadequacy.The second chapter is the introduction of basic theories. It mainly introduce the basic definitions of insurance agency, operational risk, risk management which provide theoretical support of this research. Meanwhile, it extends the characteristics of life insurance companies’ operational risk and categorization of operational risk.The third chapter introduces insurance agency’s business in Guangxi. It mainly analyzes the basic situation, business attributes and existing risk of agencies in Guangxi and proposes the four characteristics which include imbalance of corporation rights, out of control of business process,"one to many" corporation relationship, no transfer of operational risk. It also list and categorize the main risk of insurance agency’s business based on the operational risk’s types from New Basel Capital Accord.The fourth chapter is the analysis of business operational risk management of life insurance companies in Guangxi. This paper thinks although life insurance companies in Guangxi take the actions like establishing three defense lines of risk management, zero cash management, separating income and expenditure,"Bank and Insurance1+1" model, insure limitation, insurance buyer revisit, problematic case feedback, risk warning and restricting documents management, problems like operational risk management systems is not perfect, the implement of operational risk management is not in place, the situation of illegal sales is serious, disorderly competition of commission charge and conspiratorial fee evasion to disrupt the market are still existing. The proposed reasons are corporate culture are not forming, corporation relationship is loose, deformation incentive mechanism, lack of talents and techniques and products are not so diversity, etc.The chapter fifth proposes the suggestions of business operational risk management of life insurance companies’agencies in Guangxi. This paper proposes the suggestions including strengthening cooperation innovation, forming strategic alliances, transferring of development mode, perfecting the incentive mechanism, focusing on talents training, improving staff quality, improving risk control systems, paying attention to system conduction, constraining agencies, exploring credit rating which aims at the existing problems of business operational risk of life insurance companies’agencies and the reasons of these problems with connecting the practical situation.