A Study On The Impact Of Collectivization On Insurance Companies’ Performance In Our Country

With the deepening of China’s economic reform process and the gradual economicpolitical easing, on one hand, foreign insurance giants enter Chinese market; on theother hand, domestic insurance companies in China have rapidly developed in terms ofquantity and scale. As a result, China’s insurance market has become more and morecompetitive. In order to improve business performance to cope with the fierce marketcompetition, more and more insurance companies begin to choose enterprise group asthe form of business organization. However, compared with overseas Group companies,the history of our insurance Group’s companies, which starts from2002, is relativelyshort. Here is an interesting question. Can this form of business organization improvebusiness performance of insurance companies considering China’s current economy aswell as the Company strength? To solve this problem, this paper choose PICC, ChinaLife, CPIC and PingAn as sample.13years’ raw data from1999to2012of the fourinsurance groups and the use of SBM directional distance function and TFP help to findthat collectivization doesn’t help to improve the performance of insurance companies inChina as the companies are at the primary stage of collectivization. From the point ofefficiency, there is a6.68%increase before and after collectivization. However, if theincrease is decomposed into each sample company, it can be seen that most of theincrease is from PICC, while the increase of the China Life and CPIC is very weak andPing An experiences negative growth. According to the further decomposed results ofefficiency, the increase of PICC operating efficiencies mainly come from theimprovement of investment efficiency and management capabilities of paymentexpenditure. From the point of TFP, there is a decrease before and after collectivization.According to the decomposition of productivity indicator, apart from technical changes,the net efficiency, pure technical and scale efficiency change indicators show cleardownward trend. According to the results of empirical research, we believe that theinsurance companies in China should abandon the past extensive management model,promote the process of group step by step to enhance the core competitiveness ofenterprises and improve business performance ultimately. Innovations of this paper areas follows:1, The research goals is reduced to specific groups: Insurance Group inChina;2, The introduction of "bad" outputs in empirical research reduces or even avoids the possibility of exaggerating the result. Limitations of this paper are as follows:1,There is no uniform standard for the input and output variables, which makes theselection of variables depends on personal judgment.2, As there are nine insurancegroup enterprises, only four companies remain in the sample according to therequirements of model. The sample size is too small.This paper is divided into four parts: the first chapter is introduction whichintroduces the content of target and background of the thesis and illustrates the necessityof the study. Meanwhile, this part contains lists of related literature in this field layingthe foundation for the next part. The second chapter is the research of enterprise groupfrom theoretical aspect, In this part, the article firstly expound the concept of the group,secondly study the concept from the formation mechanism of collectivization from theviewpoint of enterprise organization evolution, thirdly analyze the cause of formation ofenterprise group. At last this part introduces the history and present situation of produceChina insurance group as specific application. The third chapter is empirical research,basing on the result of empirical research and the actual specific Chinese economicbackground; the paper proposed that insurance companies are still in the initial stage ofcollectivization in China and collectivization has little effect on the performance. Thefourth chapter is a summary. In this part, I put forward my own proposals according tothe problems found in empirical research such as insurance enterprises should improvethe ability of technology innovation, promote the transformation of product structure,promote the diversified development of marketing channels, develop new marketingmodes, optimize the integration of resources, enhance the enterprise operation efficiency.In the last part of the paper, innovation points and deficiencies are elaborated.