Corporate Profitability And Property Insurance Demand

With the rapid development of the economy,China has become the world's largest manufacturing country,the second largest country in insurance industry.Although the size of the property insurance industry has become the forefront of the world,there is a big gap between the density and depth of property insurance and the world's average level.Especially,the development level of corporate property insurance is not consistent with the status of the world's manufacturing scale in China.With the rapid development of property insurance market in the past ten years,there are great changes in the property insurance market.Firstly,although the premium income of corporate property insurance has increased overall,the growth rate has lagged behind the overall growth rate of the property insurance industry.Secondly,liability insurance has become an indispensable choice for Chinese enterprises to insure.Then,under the promotion of "Belt and Road",China's credit insurance will gain more development space.Finally,the rapid growth of guarantee insurance premium income scale also reflects a new trend in China's property insurance market.Insurance is of great significance to the production and operation of enterprises,healthy development,and the protection of social property in China.However,with the macroeconomic downturn in recent years,the profitability of many enterprises in China is not optimistic,especially the survival and development of small and medium-sized enterprises are facing enormous challenges,and the growth rate of corporate property insurance premium income in China has also declined,even growth rate is negative.So will corporate profitability affect its property insurance demand?How to promote enterprises to insure more actively to transfer related risks and obtain professional services from insurance companies to improve their risk management ability.This article will conduct an in-depth analysis of the above issues based on the data of listed companies in China.Most of the existing literatures use dummy variables as dependent variables to analyze the corporate property insurance demand of listed companies.However,in the actual production and operation,most of enterprises,especially listed companies,will insure property insurance,because our country regulators are not required companies to individually disclose the specific amount of their property insurance premiums.Therefore,many companies do not disclose their property insurance premiums separately in the financial statements,but instead put them in "other" subjects.So,undisclosed does not mean uninsured.Therefore,this paper analyzes the relationship between the enterprise's profit level and its property insurance demand by using the actual insurance premiums paid by listed companies in China as the dependent variables,which not only conforms to the actual situation of the enterprise,but also improves the accuracy of the model estimation.According to the relevant theories and literatures of corporate property insurance demand,this paper concludes that many factors such as risk aversion motivation,bankruptcy avoidance motivation,liquidity risk avoidance motivation,export motivation,insurance company's service level,tax avoidance motivation and debt financing motivation will have an impact on the demand for corporate property insurance.Based on the in-depth investigation and research of related references,this paper takes 288 companies that disclose property insurance premium in listed companies in China as samples.This paper constructs a regression model to study the relationship between corporate profitability and their property insurance demand.by using the panel data from year 2012 to year 2018.The premium expenditure of an enterprise used to purchase property insurance each year is used as the dependent variable,net interest rate of the business is used as the explained variable,and property insurance rate,whether it is exported,the size of cash holdings,the proportion of tangible assets,the number of employees,the asset-liability ratio,the asset tax rate,and enterprise ownership are taken as the control variables to construct the regression model.The empirical test results show that the size of cash holdings,whether export,the number of employees,and the asset-liability ratio have a positive impact on property insurance demand.The corporate property insurance rate has a negative impact on property insurance demand.Operating net interest rates,tangible assets,asset tax rates,and corporate ownership have no significant impact on property insurance demand.This shows that insurance products price,export motives,corporate liquidity,and debt financing motives all affect the property insurance demand of corporates.The profit level of enterprises does not have a significant impact on their property insurance demand.The cash holding level of enterprises has a significant impact on the demand for property insurance.Finally,this paper puts forward relevant suggestions according to the research conclusions.