Study On The Impact Of Commercial Auto Insurance Rate Reform On The Profitability Of Property Insurance Companies In China

Under the realistic background of our country’s economy rising steadily and people’s income increasing year by year,the insurance premium income of our country’s property insurance industry continues to rise.However,the extensive regulation mode and disordered competition in the property insurance industry for many years have resulted in high market monopoly,high guarantee and low compensation,and single car insurance premium rate,which have a great impact on the profitability of the property insurance companies.In order to rectify the disorder of the industry and make the industry move forward healthily,the former China Insurance Regulatory Commission(CIRC)has implemented commercial vehicle insurance rate reform in three phases since 2015.Under the above mentioned background,this thesis firstly analyzes the impact of the reform of commercial vehicle insurance rate on the property insurance companies by collecting the relevant data of the property insurance industry in the past 11 years,and finds the following four phenomena: firstly,the overall premium income and premium growth rate of the property and insurance industry have declined significantly in the short term,but with the continued progress of the commercial vehicle insurance rate reform,the overall trend of premium income has steadily increased;secondly,the growth rate of vehicle insurance premiums has continued to decline or even dropped to a negative level,the share of car insurance also dropped to less than 60% by 2020;thirdly,the overall cost rate dropped sharply in the short term,after which the overall cost rate gradually rose;and fourthly,the net profit of the property insurance industry fell sharply from 2015 to 2018,which did not recover until2019.Based on the above phenomena,this thesis further studies and theoretically analyzes the profitability of property insurance companies,the thesis puts forward the relevant variables to lay a foundation for the empirical analysis based on the reference literature.The empirical part selects the sample data of 60 property insurance companies in the property insurance market from 2010 to 2020,the rate of return on total assets(ROA)is taken as the explanatory variable,and the commercial vehicle insurance rate reform is taken as the core explanatory variable,the eight variables such as premium income,car insurance share and investment rate of return are regarded as control variables.They are classified according to different market size and solvency,and a regression model is established.According to the empirical research:firstly,the commercial vehicle insurance rate reform has a significant negative impact on the overall profitability of the property insurance industry,which shows that the property insurance industry ROA decreased by 1.8%;secondly,the reform of commercial vehicle insurance rate has no significant negative influence on large-scale property insurance companies,but it has significant negative influence on small and medium-scale property insurance companies,which shows that the former ROA only reduces by 0.8%,while the latter decreases by as much as 2.4%;thirdly,under the difficult situation of the commercial vehicle insurance rate reform in the property and insurance industry,the companies with sufficient solvency have increased their profitability instead of decreasing,as shown by their ROA increase of 0.5%,however,the reform of commercial vehicle insurance premium rate has a significant negative impact on the profitability of general solvency companies,as shown by a 2.6% decrease in ROA.Based on the variables that have a significant impact on ROA,the last chapter of this thesis focuses on the pain point of profitability growth of different property insurance companies under the commercial vehicle insurance rate reform,and put forward corresponding strategies : the overall property insurance industry should flexibly adjust the structure of insurance,actively expand the non-vehicle insurance business and continuously optimize the overall cost rate;large property insurance companies should change the management concept of “Premium is the king”and establish a refined business model,while using the leverage wisely;small and medium-sized property insurance companies should focus on increasing their market share and optimizing the service level of vehicle insurance business;the property insurance companies with sufficient solvency should pay attention to the investment income level;the property insurance companies with general solvency should seize the market by building and sinking the market through multiple channels,and introduce talents to cultivate the core competitiveness.