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Market Reform Of Auto Insurance And Risk Taking Of Property Insurance Companies

Posted on:2023-06-30Degree:MasterType:Thesis
Country:ChinaCandidate:H YangFull Text:PDF
GTID:2569307148473364Subject:Financial
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The new round of commercial auto insurance rate reform was officially launched in2015 and promoted nationwide in 2016.To a certain extent,the reform has enhanced the market innovation vitality and enhanced the market competitiveness of property insurance companies.However,the aggravation of market competition also posed a threat to the sustainable development of some property insurance companies.For property insurance companies,it can play an important role in increasing product and service competitiveness,improving profitability and reducing investment and operating risks by following the trend of auto insurance market reform,exploring the establishment of a scientific auto insurance pricing model,increasing the importance of non-auto insurance business development and strengthening asset and liability management.The auto insurance premium rate reform continues to deepen,but the relevant studies on the impact of property insurance companies focus on qualitative analysis,and few relevant literature empirically studies the impact of the premium rate reform on the risk taking of property insurance companies based on real data.This paper studies the impact of the commercial auto insurance rate reform on the risk taking of property insurance companies.Using the panel data of 37 property insurance companies from 2012 to 2020,this paper takes solvency adequacy ratio,liquidity and bankruptcy probability as risk indicators,differentiates the experimental group from the control group on the basis of the proportion of auto insurance business income,distinguish between before and after the implementation of policy based on 2016,empirically tests the impact of commercial auto insurance rate reform on the risk of property insurance companies using the difference-in-differences model.The paper also introduces the variable of investment business development level(the proportion of investment income to business revenue)to explore how the reform of commercial auto insurance premium rate changes the impact degree and way of property insurance companies’ investment business on risk taking.Study found:(1)On the whole,for the companies of high proportion auto insurance,the rate reform has a significant impact on the solvency risk,and will change the extent that investment business affects the level of solvency,but has no significant impact on liquidity risk and bankruptcy risk;(2)The HHI coefficient is used to distinguish property insurance companies with different market competitive positions,and the mechanism of rate reform on the risk of property insurance companies is further analyzed.It is found that in the oligopolistic auto insurance market,the rate reform will significantly reduce the solvency risk of property insurance companies that are mainly engaged in auto insurance business,but will increase the bankruptcy risk of insurance companies;(3)Through the group study of Chinese and foreign property insurance companies,it is found that on the whole,compared with foreign property insurance companies,the solvency level of Chinese property insurance companies decreases more after the rate reform,and the improvement of investment business level will further reduce the bankruptcy risk;(4)finally,this paper also distinguishes the property insurance companies with different risk ratings and different operating ratings for heterogeneity analysis,the study finds that for the property insurance companies with high-risk comprehensive rating,high operating rating and high proportion auto insurance business,the rate reform will reduce the solvency risk to a certain extent.However,the improvement of investment business has a weakened effect on the reduction of solvency risk,and has no effect on liquidity risk and bankruptcy risk.The empirical test and analysis of this paper provide an empirical basis for the auto insurance business operation of many property insurance companies after the rate reform of commercial auto insurance.First,in terms of theoretical contribution,from the policy perspective of the rate reform of commercial auto insurance,this paper enriched the related research on the factors affecting the solvency of property insurance companies,and explored how the impact of the investment operation of the asset end of property insurance companies on their risk taking level changes after the rate reform.Second,it has enriched empirical studies on the rate reform of commercial auto insurance.At present,the impact of rate reform on risk taking of property insurance companies is mainly qualitative analysis,and there are few empirical studies on how how the rate marketization reform affects the risk taking of property insurance companies.This paper has enriched the research scope of the impact of the current commercial auto insurance rate reform on the risk of property insurance companies by studying how the rate marketization reform changes the mechanism of how the investment business of property insurance companies affects risk taking and exploring the relationship between the degree of market competition and the risk taking of property insurance companies after the rate reform.Third,in the practical sense,this paper finds that the rate reform of commercial auto insurance can reduce the solvency risk of property insurance companies,and the improvement of the investment income level of property insurance companies can share the underwriting cost of the liability end,which helps to reduce the level of risk taking to some extent.However,for different property insurance companies,the impact of rate reform on the risk taking is different.It can provide a basis for the improvement of commercial auto insurance rate reform policies and measures and the sustainable development of different types of property insurance companies.
Keywords/Search Tags:Property insurance company, Auto insurance rate reform, Risk
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