Empirical Research On The Impact Of Governance On The Solvency Of Insurance Company

As an important financial branch,the insurance industry plays an important role in transferring risks and stabilizing the economy.Solvency is the company's ability to pay for predictable and unpredictable insurance premiums.It has always been the focus of insurance inspections and an indicator of company stability.In recent years,China's insurance industry has enjoyed a strong momentum of development and its premium income ranks second in the world.However,the extensive development of industries under a scale-oriented regulatory system has also brought about asset shortage on the investment side and mismatch of assets and liabilities.To this end,the second-generation solvency regulatory system(abbreviated as "reimbursement second-generation")was formally implemented in 2016.The system is still supervised with the solvency adequacy ratio as its core,but it has carried out the minimum capital and actual capital to varying degrees.The refinement and re-definition of each asset type and business change can be reflected in the adequacy ratio indicator,opening up a new era of China's insurance industry dynamic supervision.This paper uses the perspective of governance,systematically reviews the domestic and foreign insurance companies governance,solvency influencing factors and the related literature of the relationship between them,and outlines theoretically the impact of the external supervision of insurance companies and internal governance on the solvency,followed by empirical analysis.In terms of external supervision,the impact of the second generation of compensation as an agent variable of external regulatory pressure changes on solvency is examined.Then,the risk discovery process induced by the reform of the second generation of compensation under different types of insurance and different organizational forms is examined,and the regulatory reform is implemented.The specific content and the change point to a combination of specific objects and governance effects.In terms of internal governance,this study discusses the impact of specific insurance company governance elements on solvency based on the background of the Second Generation Compensation.Finally,this paper conducts a sample-based robustness test and finds possible problems and obstacles in the governance mechanism of Chinese insurance companies,which in turn provides a reference for Chinese insurance companies to improve their governance and enhance their solvency.The study finds that in external governance,the solvency adequacy ratio as a risk indicator shows a declining trend in the short term.Further molecular surveys have found that the solvency of life insurance companies and limited liability insurance companies is significantly negatively related to external supervision.The calculation of the minimum capital under the second generation of compensation is relevant;in terms of internal governance,the increase in the proportion of independent directors helps to promote the solvency of insurance companies from the perspective of internal governance.Excessively large or small executives are not conducive to insurance companies.With the increase of solvency,other governance mechanisms have not shown significant effects.Taken together,the external supervision of China's insurance under the background of the second generation of compensation helps the company to discover risks and guide the company to rationally allocate risk capital;internal governance mechanisms have a weaker impact on solvency as a whole,and only individual governance elements can be effective.There is still much to improve in corporate governance.