The so-called personal insurance refers to a kind of personal insurance with human life as the subject matter and life and death as the insured accident. With the increase of GNP year by year, China urban and rural residents pay more and more attention to life insurance. What is life insurance?
Life insurance can be understood as that the insurer pays the insurance money when an insurance accident occurs in the life of the insured. At first, life insurance was to protect the financial burden that unpredictable death might bring. Later, savings were introduced into life insurance, so insurance companies will also pay the agreed premium to those who are still alive when the insurance expires. Life insurance is a kind of social security system, and it is an insurance business with human life and body as the insurance object. For everyone, death, old age, disability, illness and so on. Are all dangers in life. We call it personal danger.
From a social point of view, there will always be some people who have accidents, get sick, and all kinds of dangers threaten people's lives at any time. Therefore, we must adopt a method to deal with personal danger, that is, give some material help to those who are in financial danger and their families. Life insurance belongs to this method. It is characterized by concluding insurance contracts and paying insurance premiums to provide protection for the insured, so as to enhance their ability to resist risks, formulate family financial planning, build psychological defense lines for urban and rural families and create a harmonious living space. As an investment means with dual functions of insurance and savings, life insurance is more and more understood, accepted and loved by people. Life insurance can protect people's pension, medical care, accidental injury and other risks. People can prepare for old age when they are young, prepare for tomorrow today, and prepare for the next generation from the previous generation. In this way, when accidents happen, residents' lives will be guaranteed financially, and they can rely on their old age to fight diseases.
With the development of China's life insurance, the types and mechanisms are becoming more and more perfect, including term life insurance, whole life insurance, survival insurance, life and death old-age security, old-age insurance and health insurance. If it is refined according to the risk-return structure, life insurance can also be divided into risk-guaranteed life insurance and investment and wealth management life insurance. Although life insurance accounts for a large proportion in many insurance businesses, China's insurance market is relatively immature and the competition is increasingly fierce, which also brings various obstacles to life insurance.
Second, the risk of life insurance
(1) From the perspective of the industry itself, there are four outstanding risks in life insurance:
1. Cash flow risk
That is, the risk brought by the sharp reduction of new business and the surrender of a large number of policies. Due to the long-term characteristics of assets and liabilities, the impact of such risks on life insurance companies is far greater than that of non-life insurance companies. In 2003, a large number of life insurance products were surrendered, but the new premium increased slowly and the potential cash flow risk increased day by day.
2. Investment risk
Before the promulgation of the Insurance Law, the investment activities of insurance companies in China were very chaotic. Insurance companies invest heavily in the tertiary industry, real estate and loans, resulting in a large number of bad debts and overdue loans. After 1995, this kind of investment activity has been restrained. However, due to the lagging development of the capital market and other factors, insurance companies are facing great investment risks, whether they entrust securities companies or other institutions or set up asset management companies to manage their finances. In the past two years, the stock market has been falling all the way, and the risks in the securities industry have spread to insurance assets. Before and after the central bank raised interest rates in June, 5438 +2004 10, the yields of bonds such as national debt dropped sharply. In 2004, the proportion of bonds held by insurance companies reached 38% of total assets, and the investment risk increased significantly. The low investment benefit directly affects the solvency and operational stability of insurance companies and becomes the biggest obstacle to the development of insurance companies in China.
3. Risk of price difference loss
It is estimated that the insurance policies before 1999 will increase the spread loss of China life insurance industry by about 2 billion yuan every year, and the total spread loss of life insurance industry will exceed 72 billion yuan by the end of 2004, accounting for about 9% of the total assets of the industry. Even if all life insurance companies make up the spread loss with all their business surplus, it will take 10 years to resolve it. [1] If the investment income is not ideal, the settlement time will be extended.
Although the pressure of interest margin loss will be reduced after entering the interest rate hike cycle, it is difficult to eliminate interest margin loss naturally regardless of the length of interest rate hike cycle or the extent of interest rate hike, because before 1999, the average scheduled interest rate of the policy was as high as 7%, and the average term of the policy was as long as 35 years. This means that in the next 10 years or so, the life insurance industry in China, especially the established companies, will bear a heavy historical burden. The seriousness of the problem also lies in the fact that the real risk of spread loss may be greatly underestimated because of the widespread distortion of financial data in insurance companies.
4. Asset-liability matching risk
Due to the lack of effective risk control mechanism, the problem of asset-liability mismatch in China's life insurance industry is quite prominent. In particular, in order to pursue high-speed growth, some companies often do not fully consider the term, income, interest rate, possible future changes in exchange rate and other factors when pricing life insurance products, but only from the perspective of market competition, or even simply imitate other companies' product pricing. According to the calculation of relevant departments, the matching degree of assets and liabilities is higher than 50% in five years, but the matching degree of assets and liabilities in the medium and long term is much lower than 50% in more than five years, and the mismatch between assets and liabilities is quite serious.
(2) From the analysis of market development, there are three major risks in the life insurance industry:
1. Risk of excessive concentration of assets
When the assets of an insurance company are highly concentrated on a single asset or a certain type of assets, the fluctuation of asset value will easily bring risks to the insurance company. This kind of risk should be avoided through asset diversification, but it will be difficult to realize asset diversification of insurance companies when the investment channels of insurance funds are still largely controlled. In 2003, among the total assets of 9122.8 billion yuan, bank deposits accounted for 49.9%, and the concentration was obviously too high. Although this situation has improved in 2004, the degree of improvement is still very limited.
2. Managing risks
The growth mode of some companies is still quite extensive, and there are some phenomena such as irregular operation, illegal operation and chaotic management of important vouchers, which lead to distortion of financial information, loss of funds or cross-account use. Due to out-of-control management, some companies have big loopholes in premiums receivable and outstanding claims, which have become the main source of risks.
3. Shareholder risk
At present, the potential risk of large shareholders using their controlling position to occupy enterprise funds has emerged. However, the practice of foreign insurance companies transferring profits to overseas affiliated enterprises in the form of related transactions such as reinsurance may also lead to insufficient solvency of their branches or subsidiaries established in China (for example, among the seven branches established by AIA in China in 2003, five companies had negative owners' equity. )。 In addition, at present, many private investors who are keen on insurance companies do not understand insurance. After becoming shareholders, it is difficult for them to wait patiently for several years to obtain investment income (life insurance companies usually need 7-8 years to enter the profit period. ), and the dividend pressure of shareholders is often an important reason for the short-term behavior of operators.
In short, in addition to the above obvious risks, there are still many problems in China's life insurance at this stage: imperfect system, lagging laws and regulations, insufficient public awareness of insurance, wrong understanding of insurance companies, lack of experience, weak risk control ability, lack of professionals and technology, and imperfect organizational structure and management methods.
Third, actively respond to risks.
(A) systematic risk analysis of life insurance industry
China's life insurance industry has three basic characteristics: first, the characteristics of life insurance itself determine that most products are medium-and long-term products with a term of more than one year; Second, taking individual customers as the main service target; Third, in the period of rapid development in previous years, in order to pursue scale expansion, a large number of investment products were promoted. In 2003, the market share of investment-linked insurance and dividend-paying products reached 58%, while the market share of traditional life insurance products was only 30%. These three basic characteristics make the business activities of life insurance companies inevitably face the following problems:
First, the long-term nature of life insurance funds makes the external environment have a great influence on the operation of enterprises, and China's capital market is imperfect (including the capital market is too small, the types of tradable financial products are insufficient, the market order is chaotic and the system defects are serious, and the market lacks vitality and efficiency. ) will inevitably greatly affect the investment efficiency and safety of life insurance funds. This imperfection has no prospect of improvement in the short term.
Second, the long-term nature of life insurance products makes the matching degree of assets and liabilities have a great influence on life insurance companies. Whether it is the mismatch in terms of term and interest rate, or the mismatch between asset value and liability value caused by market exchange rate and interest rate fluctuation, it may bring the company the risk that assets cannot be realized in time and due compensation can be paid.
Third, compared with phased products, wholesale products account for a large proportion, which is not conducive to the establishment of stable cash flow for insurance companies. At the same time, from the perspective of embedded value, although the premium of investment bank insurance products accounts for a relatively large proportion, it has made little contribution to embedded value. Therefore, the unreasonable structure of life insurance products often covers up the potential risks of the insurance industry and ultimately affects the solvency of insurance companies.
Fourthly, the service characteristics of individual customers make the business of life insurance companies more vulnerable to the impact of surrender, and the social cost of life insurance companies' business failure is also higher, which will have a greater impact on the social image of life insurance industry.
Based on the above analysis, we can draw the following conclusions: in the medium and long term, the factors that are most likely to cause systemic risks in life insurance industry are investment failure and mismatch of assets and liabilities; In the short term, the most likely factor to cause system risk is cash flow risk. At the same time, the systematic risk of life insurance industry is obviously greater than that of non-life insurance industry, and it is also more sensitive to the changes of external environment, which needs to be paid full attention to. It is particularly important to note that in the next 2-3 years, because a large number of wholesale investment products are about to expire, insurance companies will not only face the pressure of centralized redemption, but also face the pressure of capital outflow after redemption, and the cash flow risk will increase significantly.
(B) Long-term healthy and stable market strategy
In this risky environment of life insurance, how to minimize the risk? Risks need to be measured, evaluated and dealt with. The ideal risk management is a series of prioritization processes, which give priority to the things that can cause the greatest losses and the most likely to happen, and postpone the things with relatively low risks.
But in reality, the optimization process is often difficult to decide, because the risk and the possibility of occurrence are usually inconsistent, so we must weigh the ratio of the two to make the most appropriate decision.
The risk management of life insurance is also facing the problem of effective use of resources. This involves the factor of opportunity cost. Using resources for risk management may reduce the resources available for incentive activities; The ideal risk management is to resolve the biggest crisis as much as possible with the least resources. [2]
For the life insurance industry at this stage, risk management is to identify, predict and measure risks, and to choose effective means to reduce costs as much as possible, to deal with possible risks in a planned way, and to obtain economic guarantee for the healthy development of life insurance industry. This requires life insurance companies to identify the risks that may exist in the process of operation, predict the negative impact of various risks on resources and production and operation, and make production sustainable. It can be seen that risk identification, risk prediction and risk treatment are the main steps of risk management.
Feasible measures:
1 Deeply understand the economic cycle changes. If China's economic growth slows down, unemployment rises and hyperinflation occurs, it will directly affect the insurance industry. On the one hand, the growth rate of premium income of insurance companies will decline or even have negative growth; On the other hand, the surrender rate will rise all the way, and the combination of the two will easily lead to cash flow difficulties and repayment crisis for insurance companies. According to the economic cycle, formulate relevant strategies to balance the vicious circle of life insurance industry brought about by the economic cycle.
2. Always pay attention to whether there is a deterioration of the financial market situation or overseas financial crisis transmission. Both risks and crises are conductive. Due to the high correlation between financial industries, once other financial industries have a crisis, it will soon be transmitted to the insurance industry.
Strengthening the coordination with government departments, the great adjustment of political factors and economic policies also have a great impact on life insurance, and the government's macro-control of the market is relatively tight, which is a significant difference between the domestic life insurance industry and other regions. Therefore, it is necessary to strengthen communication and coordination with relevant government departments and seek the support of local governments.
Pay attention to service innovation, enhance the reputation of the company, actively advocate the new concept of humanized and information service, and strive to form a new pattern of socialized and rational service.
Development expectation
Due to the complexity of China's life insurance industry, the situation of life insurance industry will not be greatly improved without essential reform in the short term, but if we can operate according to the effective measures analyzed in this paper, it will at least bring a benign competition space and a harmonious development space to the domestic life insurance industry. At the same time, it can effectively manage risks and obtain benefits.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.