Study On The Systemic Risk In Chinese Insurance Company

Recently,with the frequent occurrence of global financial crisis and the regional financial crisis,the term "systemic risk" began to enter the public's eyes.On August 28,2015,Premier Li Keqiang presided the convening of the State Council special meeting stressed that "we must keep the deadline that does not occur the regional systemic risk ",then,either in large or small financial meetings,to prevent systemic risks was repeatedly mentioned.On April 25,2021,on the CPC Central Committee Political Bureau meeting,it was said that "We should pay high attention to prevent and control of financial risks,strengthen supervision and coordination,strengthen the financial services,real economy,and to ensure that systemic financial risks do not occur." It can be seen that the systemic risk of the financial industry has received widespread attention from government and economists.Though in the financial crisis of 2008,the Chinese financial system was not impacted,nowadays,the correlation and risk propagation between Chinese insurers are rising.Especially in recent years,cross-market financial services and cross-market financial services between insurers,banks and securities began to become a trend,the correlation between financial institutions is constantly improving,and the risk contagion is expanding as well.Insurance is an important part of the financial system,the economic compensation and financial inter mediation of insurers play an indispensable role in both maintaining the stability of the financial system and the stability of the whole society.Therefore,from a practical point of view,the study of Chinese insurance industry systemic is very important.Through the study of the types and infectious mechanisms of the systemic risk of the insurance industry,it can effectively prevent and reduce the systemic risk of Chinese insurance company and promote China's economic development..As the aspect of theory,the paper describes the definition of systemic risk in the financial industry,the definition of systemic risk infection and the two factors that cause systemic risk.On the basis of these theories,we analyze according to the actual development of Chinese insurance industry,and compare the systematic risk between Chinese insurers and banks.At the same time,this paper also introduces how the Geneva Association plays an importance role in the establishment of global systemically important insurers(G-SII)and how this assessment method refers to D-SII establish in China.As the aspect of empirical analysis,we use the monthly return on equity of 25 financial institutions from 2008 to 2016,including 3 insurers,15 banks and 7 securities companies.The main methods we used in empirical analysis are the principal component analysis and Granger causality test,among them,the principal component analysis model mainly calculates the cumulative value of risk and contribution rates of system risk among financial institutions,Granger test is mainly used to test the causal relationship,after that,we static numbers of relationship,thus analyse the associations between different financial institutions.The empirical conclusion shows that contribution rates of system risk is large in insurance industry,when studying the systemic risk,we can not only focus on the banking sector,the systemic risk in the insurance industry should also be taken seriously.As can be seen from the Granger test,the interconnection of insurance companies is very close,the links between insurance companies are relatively stable and they are not affected by external economic environment.Insurers,banks and security companies are also related closely,but these connections will fluctuate with changes in the external economic environment.At the end of the article,this paper introduces the definition of macro-prudential regulation and regulatory tools.In addition,it introduces the situation of cross-financial innovation and the current development of this model in China.Based on this,some suggestions on penetrating regulation are put forward.