Research On Factors Of Chinese Property Insurance Company’s Solvency Under "C-ROSS"

In modern society,the insurance industry has become an indispensable part of ensuring the normal operation of the economy and the stable development of society.Insurance companies are risk-based business and adopt a special business model which is " Collect premium before payment".Insurance company has the obligation to pay compensation after the it collects the premium of the policyholder.If an insurance company’s financial situation deteriorates due to poor management and it is unable to pay the compensation,it will cause widespread social impact and even endanger the stability of the financial order and the stability of people’s lives.That puts forward strict requirements on the solvency of the insurance company.Therefore,solvency supervision has become the top priority of national insurance supervision.In April 2012,China Insurance Regulatory Commission decided to build a second-generation solvency supervision system.After the three years,the China Insurance Regulatory Commission announced the "the Solvency Regulatory Rules(No.1-17)for Insurance Companies" in February 2015,marking the transition period for the insurance industry to enter the second generation of supervision.After one year of trial operation,the China Insurance Regulatory Commission decided to officially implement the China Risk Oriented Solvency System since 2016,which indicates that China’s insurance solvency supervision has entered a new chapter.On september 2017,the CIRC issued the second-generation second-term project construction plan,which aims to improve the solvency supervision system and enhance the risk management capability of the insurance industry.Under the new regulatory system,China’s solvency supervision has undergone major changes.The C-ROSS has established a three-pillar supervision system with quantitative capital requirements,qualitative regulatory requirements and market restraint mechanisms.It has three distinctive features of international comparability,risk orientation and industry reality.The first pillar quantitative regulatory requirements which requires insurance companies to hold capital that matches their risks.It mainly to prevent quantifiable solvency risks of insurance companies through scientific identification and quantification of various risks.The second pillar qualitative regulatory requirements on the basis of the first pillar quantitative that further prevent risks that are difficult to quantify.On the basis of the first pillar and the second pillar,the third pillar market restraint mechanism that relies on the market’s binding force to prevent risks that are difficult to prevent by relying on conventional regulatory tools.It prevents risk by supervising the insurance company’s public information disclosure and improving transparency.Since the implementation of C-ROSS,domestic insurance companies have adjusted their business structures according to new regulatory requirements.What impact will this have on their solvency?Especially for insurers with different solvency levels,are there any differences in their impact factors?These are the issues that the insurance industry is focusing on.Therefore,it is particularly important to study the influencing factors of the solvency of China’s property insurance companies.This paper studies the factors affecting the solvency of property companies in the context of the formal implementation of C-ROSS.This paper uses the panel quantile regression method to fully mine and sort out the data information,and study the differences of different factors on different solvency levels.This paper provides relevant suggestions to improve the solvency of property insurance companies.This paper has five parts.The first part introduces the background and significance of the research,and then briefly explains the research of solvency at home and abroad,and finally points out the research methods,innovations and deficiencies of the papers.The second part first explains the concept of solvency and solvency regulation and the significance of solvency supervision.Then the paper introduces the foreign mainstream solvency supervision system and current solvency supervision in China which specific framework and advantages.Finally,it analyzes the influencing factors of the solvency of insurance companies from the external and internal levels.The third part introduces the panel quantile model.It includes the concept of the quantile model and advantages which are better than the mean regression model.Then,it finished this chapter by a brief description of the advantages of the panel quantile model and the parameter estimation.The fourth part is the empirical analysis of the influencing factors of the solvency of property insurance companies.Frist of all,according to the historical financial data of the property insurance company for 2009-2017,this chapter chose dependent variable and independent variable.The dependent variable is the solvency ratio which is re-measured according to the requirements of the C-ROSS.The independent variables include reinsurance ratio,loss ratio,net asset ratio,investment ratio,Herfindahl-Hirschman Index and Return on Assets.Then this part compares the estimated parameters which panel fixed effect model and panel and give the corresponding explanation.Finally,it is concluded that reinsurance rate,loss ratio,net asset ratio,and Herfindahl-Hirschman Index significantly affect the solvency of property insurance companies,while investment ratio and return on assets have different affect on companies with different solvency.The five part is the summary of the full text.According to the model operation results of the fourth part,this part provided the suggestions to improve solvency adequacy of the property insurance companies.