Empirical Research On The Efficiency Of Chinese Insurance Companies

Chinese insurance industry has experienced many changes and transitions since China resumed its insurance industry in 1980. From China’s further opening of its economy, to the improvement of insurance law and the supervision system, further to the insurance market segmentation and the entry of foreign capital, it is all these opportunities let Chinese insurance industry make remarkable achievements. But at the same time, with the rapid development, Chinese insurance industry has a negative momentum. That is "high cost, low output, poor quality", and this situation seriously restricts the healthy development of Chinese insurance industry, thus fundamentally solving the problem is particularly important and urgent.Efficiency has always been one of the core problems in finance and economics, because efficiency is directly related to the rational allocation of limited resources and applications. So the thesis will measure the efficiency of the Chinese insurance companies. At the same time, by the results, it will analyze why those insurance companies’ efficiency change and the factors that influence efficiency. Then we can finally seek a way to improve the efficiency of operating and stay competitive.The thesis selects the sample data of 82 insurance companies in China from 2007 to 2012. Taking the non-radial, variable returns to scale to adjust the three stage DEA-Malmquist model, the thesis will calculate TE, PTE, SE, Malmquist index and decompose Malmquist index of 39 property insurance companies and 43 life insurance companies during the sample period. The second stage of the model will use SFA model to screen off the external environment and the random error that may cause deviation, so the results of measurement are more convincing. Afterwards, the thesis will vertically and horizontally compare the efficiency of the insurance companies to reveal the difference of efficiency between different categories of insurance company analyze the reasons. Finally, the thesis will use Tobit regression model and fuzzy comprehensive evaluation to measure and analyze the significant factors that influence efficiency of Chinese insurance companies comprehensively.After concrete study, the main conclusions of the thesis are as follows:For now,with regard to the comparison results, TE of foreign insurance companies is slightly higher than that of Chinese insurance companies, and TE of life insurance companies is generally higher than that of property insurance companies, and TE of traditional insurance companies is higher than that of new insurance companies in principle. From the point of Malmquist index, promoting TE basically relies on improving scale efficiency. At the same time, PE change of Chinese insurance industry is very stable. So achieving technological progress has become a new impetus to the improve of TFP. From a macro perspective, fixed assets, operating time and the market share have significantly positive correlation with PE of the insurance companies. While the number of employees and the type of insurance companies have little correlation with it. From a single company’s internal perspective, the financial condition of the profitability and solvency, the ability to withstand risks and insurance business, the market share, these four sub-factors have a decisive impact on the efficiency of an individual insurance company.According to the above conclusions, the thesis presents nine recommendations to improve the efficiency of Chinese insurance companies, which are absorbing advanced technology from foreign insurance companies, expanding market share, diversifying insurance products, streamlining the insurance practitioners, optimizing the structure of the insurance market, more stringent regulatory regime, improving risk management, the rational allocation of investment funds, proposing the exit mechanism for Chinese insurance companies.