Research On Mandatory And Voluntary Information Disclosure Of Life Insurance Company

As the economic globalization and the rapid development of modern technology, the era of information explosion is coming. We can easily get a lot of information, but there’s still information asymmetry problem, and the significant market is insurance market. Because of the information differences between insurer and insured、beneficiary、governor、investor, it leads to many problems, such as insurance fraud, claim fraud, false investment and misappropriation of premiums. As a result, the credit and attraction of insurance market has been significantly damaged, so does life insurance. In order to reduce the harm of information asymmetry, information disclosure is one of the best and effective solutions. At the same time, it has gotten the world’s attention. The China Insurance Regulatory Commission (here in after referred to as "CIRC") specifically formulated "Insurance Company Information Disclosure Rules" (here in after referred to as the "Rules") on May 26 in 2010, listing the purpose of disclosure of the insurance company, the content, manner, time and management. At the same year, the International Accounting Standards Board issued the Exposure Draft ED, "insurance contract" to make its efforts to promote international harmonization of insurance contract accounting standards. In the Draft, information of insurance contract disclosure is independently listed the detailed provisions, including goals, content and detailed requirements.Many researchers have studied the information disclosure, but there are a few-studies about life insurance disclosure in China, especially in quantitative research method. Therefore, the author prepares to study the life insurance company’s disclosure on the base of foreign scholars. I’ll divide the information into mandatory and voluntary information from the perspective of accounting control and discuss them respectively. This is completely a boldly innovative study. I’ll explore the level of voluntary disclosure from a quantitative method, taking advantage of the "rules" to be implemented in the first year of all domestic life insurance companies for the first time in public disclosure report. According to the qualitative research on mandatory disclosure and the empirical study on the voluntary disclosure, it’ll definitely provide useful suggestions for the formation of a perfect life insurance company’s information disclosure system.To make the study of life insurance Company’s information disclosure thoroughly and comprehensively, the article is divided into a total of five parts:First is the introduction part. This part is mainly to highlight the value of the research from the view of international and domestic organizations, and then leads to the main content of the study. The content includes: exploring Chinese insurance company information disclosure system; the differences disclosure regime comparing to the International countries and districts; voluntary information disclosure level of life insurance companies; how to further regulate the mandatory information disclosure of Chinese insurance companies and guide voluntary information disclosure; how to construct a perfect standards of life insurance companies information disclosure system. In this part, I also outline the researches of scholars at home and abroad, and lead the innovations of this article which are the object of study, the fresh perspective and a more comprehensive research method.Second is the theoretical explanation part. It mainly introduces the necessary of study from the theory view. The study quotes two theories to explain the value of information disclosure study:Asymmetric Information Theory and Principal-agent Theory. Finally, it reveals the specificity of the information disclosure of life insurance companies from the following aspects:products, long-term contracts, methods of premium paid, setting price, financial performance, daily operation and financial outcomes. So it further emphasizes the necessity of research topics and research value.Third is the qualitative analysis of the mandatory information disclosure of Life Insurance Company. At the beginning, I study the current situation analysis, which is mainly described from the insurance accounting system, Insurance Law, Securities Law and other sort of regulations aspects. Then I list the special provisions on the disclosure of life insurance companies, such as "the new life insurance product information disclosure management approach" which is promulgated by the CIRC in 2009, the "public Offering of Securities information Disclosure of Companies No.3--rules for the special Provisions of the content and Format of prospectuses for Insurance Companies" which is issued by China Securities Regulatory Commission in 2006. Then I expand my study view to the international field. I compare our insurance system to the latest requirements of International Accounting Standards Board, the provisions of the International Association of Insurance Supervisors, and the United States, Britain, Japan, Taiwan region separately, and provide some suggestions to establish a good criterion and system for Life Insurance Company. Then it supplies the disclosure objective and principles of Life Insurance Company. The study shows that the objective is "not only, in favor of the relevant market participants to make useful information for decision making, but also to protect the company business secrets, in order to make an appropriate balance." At last, the study gives some suggestions. The suggesting includes three aspects:first is the suggestion for a better insurance system. It mainly discusses from the legal system, disclosure body, disclosure content, disclosure object, disclosure channels and obligations and other aspects. Second is the presentation of the return. We still should insist on what we use now, but we can encourage the "summarize margin" method. Third is to strengthen from the regulatory point of view, that mainly focus on the improvement of early warning indicator system, the disclosure of cash flow and the importance and timeliness of temporary information standards and formulation rules for punishment.Fourth is the empirical analysis part of the voluntary disclosure level of China’s life insurance company^ First of all, I introduce the method to quantify the indicators. It mainly draws on the research of scholars at home and abroad, and chooses to build the voluntary disclosure index to measure the life insurance company’s voluntary disclosure level. For the construction of the index, it includes three steps:project’s selection, assignment processing and index calculation. The study divides the life insurance company information into five categories:strategic information, management discussion and analysis, the key non-financial information, the forecast information and background information; and then making use of the Cranach’s coefficient alpha and the relationship of voluntary disclosure index and company features to exam the validation of the voluntary information index. Followed taking the disclosure information reports of 52 life insurance companies announced in 2011 as a research sample, the study make an empirical analysis from the overall level, sub-items of information, nature of the company and disclosure time. And through the empirical study, I get the following results:①As a whole, for the information reports of life insurance companies in 2010,the voluntary information disclosure level is not enough, and the enthusiasm for voluntary disclosure is weak and the contents is not only less than the information needs, but also has great differences. ②Management’s discussion and analysis information disclosed at a better level. For the company’s current market share and the company’s overall business conditions and financial analysis information, all study samples were not clearly presented in the annual disclosure reports. ③Background information disclosure is lack of some detailed information, such as sources of the company’s premium income, the form of charges and product type.④the key non-financial information disclose level is also very low, only taking a proportion of 7.7%.⑤the average disclosure level of strategic information is also very low, just less than 4%, and there are 41 companies did not disclose this information at all in its annual reports.⑥there are few differences between the local life insurance companies and foreign companies. Their voluntary information disclosure index is almost at the same level, although the overall level of foreign life insurance company is slightly better than the Chinese local companies. ⑦ Disclosure time is highly concentrated, which are basically concentrated in late April. At last, according to the results of empirical analysis, the research gives some suggestions for guiding voluntary disclosure of information of life insurance companies, which includes:to encourage voluntary disclosure information and make related guidelines as soon as possible; to strengthen supervision; to detail basic information; to increase strategy and forecasting information; to improve management’s discussion and analysis; to normalize key non-financial information.The last part is a summary of the study. It points that both mandatory information and voluntary information are necessary, and we make rules to guarantee the basic information which are needed for external users, but also need to improve the enthusiasm of companies and guide their voluntary disclosure information. We need "hard" regulations, but cannot ignore the "soft" guidelines, both information disclosure are indispensable to construct a standardized system for China’s life insurance companies, so that to make a better and faster development for our life insurance. As for the study limitations, it mainly concentrate that there’s limited survey samples for building the voluntary disclosure index.It is still a need to expand the range and get more consultations; moreover it’s weaker for trend research just only using one year data, which can be used for further research.Above all the discusses, I think there are innovational points:first is innovative perspective. The study discussed the disclosure information from the nature of information view for the first time which are the mandatory and voluntary disclosure information of life insurance companies, and then made a comprehensive analysis and elaboration. Second, in order to construct a perfect life insurance company disclosure system, the study was first proposed to establish disclosure system’s objective, which is feasible to practice and the idea is good. Third is the first time to study life insurance Company’s voluntary disclosure level from a quantitative view. The article took use of the annual disclosure reports of 52 life insurance companies which first announced in 2011, and constructed a voluntary information disclosure index on the basses of researches at home and abroad, life insurance company’s actual operating conditions, and suggestions of users, experts and scholars. Of course the study also made examinations for the voluntary disclosure index’s validation to make sure that is valuable. Fourth is the comprehension. There’re both qualitative analysis and quantitative analysis, and a comparative analysis of the information disclosure system with overseas countries （regions）, organizations and districts. It can be said that the study gave an overall analysis, and the suggestions are also practical, so it has a high value.