Research On The Pricing Of Microfinance Guarantee Insurance In China

In our economic society, there are many types of enterprises, which divided according to size most are small and medium-sized and micro enterprises. Therefore, a good survival and development for these enterprises is related to the country’s economic development level and quality. As the basic element of development, sufficient capital is essential to the growth of a enterprise. However, the small and medium-sized and micro enterprises in our country are facing serious financial difficulties, the reality of bank credit crunch makes it difficult to obtain sufficient financial support. Therefore, the combination of insurance and loans can open up a new way of financing.At the same time in China’s insurance market, the type of property insurance is still relatively single, in which auto insurance occupies a major part. In contrast, the market lack of variety and application of guarantee insurance. The promotion of microfinance guarantee insurance is the solution of financing problems, and is also conducive to the development of the insurance market diversification.Some property insurance companies have already get involved in microfinance guarantee insurance business, but because of the high risk and difficulty in risk control, the companies are facing challenges. This paper aims to study more effective microfinance guarantee insurance pricing methods, to provide reference to the theory and practice.Because of the adverse selection and moral hazard of enterprises, this paper adopts a differential pricing method in insurance pricing.According to the concept of microfinance guarantee insurance, we find that it has the nature of European put option, the option pricing model can give a result of pure premium price. In the option pricing model, the income is the source of repayment. When the revenue value is less than the value of the mortgage, default events will occur, and the option will be exercised, the insurance company is to fulfill its obligation of compensation. As long as the firm’s revenue and its volatility, loan amount, interest rate and interest term are determined, the pure premium comes out.Then use the analytic hierarchy process to layer risk assessment indicators.According to the scoring results on the risk indicators from ten experts, calculated the index weight of each risk indicator. Calculate the final risk score of the enterprise, and then give the risk and the additional premium for enterprises of different score. In the end, premium calculation result is finally obtained. The research can provide some references for the study of the pricing of the microfinance guarantee insurance in our country.