Research On The Impact Of Commercial Auto Insurance Rate Reform On Small And Medium-sized Property Insurance Companies

With the continuous improvement of China's economic,the market of property insurance has bright prospects and great potential for development.In China,the motor vehicle insurance business has the largest proportion of the property insurance business.As an important part of the property insurance business,the premium income of motor vehicle insurance business is the main source of premium income of property insurance companies.The motor vehicle insurance business in China started late and will still be in the stage of continuous exploration and development for a long time.In order to guide the normative development of commercial auto insurance business and solve the significant problems in its development process,China has launched two-round reform of the motor vehicle commercial insurance.After the first round of the reform launched in 2003,while the motor vehicle insurance market was booming,disorderly competition also intensified year by year.The problems caused by the unified control model and the homogenization of products are gradually exposed:The concentration of motor vehicle commercial insurance business is too high,and the market share of large and medium-sized property insurance companies accounts for more than 80%and has an increasing trend;The competition in the motor vehicle commercial insurance market is fierce,and the problems of malicious low-price competition,high handling fees,and high-speed comprehensive cost ratios of auto insurance businesses are intensifying;In addition,there are many problems in traditional motor vehicle commercial insurance,such as High premium but Low compensation,unreasonable pricing mechanism and so on,these problems not only makes moral hazard cases frequently(such as deliberately creating insurance accidents to defraud insurance compensation),but also fails to effectively protect consumers' rights and interests.Therefore,property insurance companies are criticized by customers and public opinions.The above problems have greatly affected the healthy development of the motor vehicle auto insurance market and even the property insurance industry.In order to rectify the chaotic phenomena,solve the exposed problems and standardize the motor vehicle commercial insurance business of Property Insurance Companies,in 2015,the second round of reform of the motor vehicle commercial insurance was started.In addition to making changes in the insurance terms and liabilities of motor vehicle commercial insurance,this reform is particularly important in changing the pricing mechanism of motor vehicle commercial insurance premiums.And in more than three years,the lower limit of the discount coefficient of the motor vehicle commercial insurance rate was adjusted three times.After that adjustment,the average single premium of motor vehicle commercial insurance has gradually decreased,allowing consumers to effectively enjoy the dividends of the reform.At the same time,it has also had a huge and profound impact on the motor vehicle commercial insurance market and each property insurance company's motor vehicle insurance business,but new issues have also arisen.Taking the Small and Medium-sized Property Insurance Companies of Shandong province as the research objects,this paper studies the changes brought about by the reform that started in 2015,and analyzes the impacts of this reform on Small and Medium-sized Property Insurance Companies.Through in-depth analysis of the reasons,background,process and related content of the reform,the significance of it is clarified,and focus on the changes of small and medium-sized property insurance companies after the reform.In order to quantify the changes,this paper takes the vehicle insurance business data of Shandong Jinan as a sample,and uses quantitative statistics and model empirical test to analyze it..After studying the changes in various business indicators of small and medium-sized property insurance companies,it was found that reform,the small and medium-sized property insurance companies in Shandong Province faced increased market competition and a more severe living environment.In the case of continuous decline in single-average premiums,the premium income of small and medium-sized property insurance companies showed a trend of rising first and then falling,especially in the meantime the market shares gradually declined.The empirical parts take 27 small and medium-sized property insurance companies that continue to exist in the auto insurance market during the certain observation period in Jinan as the sample,and tests the impacts of the reform on the operation of these small and medium-sized property insurance companies by building a model to the auto insurance market.Taking the motor vehicle insurance market share as dependent ariable.The total premium income,the maturity loss rate,and the sales expense rate of motor vehicle insurance business are control variables.The reform of motor vehicle commercial insurance is a dummy variable set as an explanatory variable.The regression results show that the reform of motor vehicle commercial insurance rate has a significant negative correlation with the market share of small and medium-sized property insurance companies,and there is a strengthening trend with the continuous downward adjustment of the lower limit of the motor vehicle commercial insurance rate discount factor.This shows that the reform of the motor vehicle commercial insurance rate has caused the market share of small and medium-sized property insurance companies to be gradually eroded by large insurance companies.With the advancement and deepening of the reform,the concentration of the auto insurance market will be further improved.Based on the empirical results and related analysis,this paper puts forward some ideas to optimize and improve the operation status of motor vehicle commercial insurance business of small and medium-sized property insurance companies,and provides relevant opinions and suggestions for the future development direction of small and medium-sized property insurance companies' motor vehicle commercial insurance business.Hopefully,it can make a small contribution to the healthy and sustainable development of the motor vehicle commercial insurance business of small and medium-sized property insurance companies and the establishment of a benign competitive environment in the auto insurance market.