Text / Sina Finance Opinion Leaders Column (WeChat public kopleader) columnist Chen Guanglei
At this stage, the property insurance industry is in a weak position in China's insurance industry and financial industry. As of December 31, 2016, large property insurance companies accounted for a high proportion of total assets and net assets. In 2016, large-scale property insurance companies also dominated the operating results indicators such as operating income and net profit. In this situation, where are the small and medium-sized property insurance companies going?
Second, small and medium-sized property and casualty insurance companies face a large operational dilemma at this stage
(4) The fee structure is relatively concentrated and relatively high
From the perspective of fees (fee and commission expenses, business and management fees), the cost structure of small and medium-sized property insurance companies has four main characteristics (see Table 4):
1. The comprehensive expense ratio is relatively high. Whether it is the fee and commission expense rate, business and management rate or comprehensive expense rate, etc., it is basically a large and small order > medium >
2. The proportion of motor vehicle insurance in the handling fee and commission expenditure is relatively largest, and it is also in the order of large and small > medium >
3. The proportion of labor costs in business and management fees is relatively large, and most of the expense items are also in large and small order > medium size >
4. The operating expense ratio is relatively high (more than 100%), and it is also in the order of large and small > medium >
Table 4 Cost structure of large, medium and small property insurance companies
Note:
1. This table does not distinguish between the structure data of property insurance companies that have not been announced and have no such business.
2. From the disclosure of the fee structure, the disclosure of commissions and commissions is relatively poor; from the perspective of company categories, large property and casualty companies are worse than medium and small property insurance companies.
3. All proportions of this table are calculated based on operating income.
4. This table only calculates items with large expenses, such as the first three fees and commission expenses and the top five business and management fees. Many small and medium-sized property and casualty insurance companies not only have certain differences in the name of the fee, but also have different rankings, but this table is only sorted according to the amount of the amount of the occurrence.
5. Operating expense ratio refers to the ratio of operating expenses to operating income.
6. The “workplace†in this table includes the rental fee, and the “intermediary fee†includes the consulting fee.
Source of data: Insurance business income data is from the notes to the financial statements in the 2016 annual information disclosure report.
In addition, the proportion of business promotion expenses (including advertising fees) in the fee structure of small and medium-sized property insurance companies is also large, which is directly related to increasing market popularity.
Directly related to the fee structure is the marketing channel. From the limited data disclosure, although the agency channel accounts for about 65%, small property and casualty companies seem to rely more on agency channels (see Table 5). This is quite different from the “three-point world†of direct sales, agency and brokerage of foreign property insurance companies.
The main reasons for the high comprehensive expense ratio are mainly three aspects: First, small and medium-sized property and casualty insurance companies have to pay more commissions and commissions and business and management expenses (such as business promotion) in order to obtain effective customers in the early stage of development. Fee), for example, the handling rate of motor vehicle insurance paid to intermediaries is as high as 40%-60%; second, the operational efficiency is not high, which is reflected in two key links: (1) Underwriting: poor pricing ability, identification The risk ability is low; (2) the claims side: the anti-fraud ability needs to be improved; the third is the weaker customer service and management ability (such as the difference between insurance service level and efficiency and customer expectations), resulting in lower renewal rate, all The cost of obtaining customers is relatively higher.
Data source: Under the notes to the financial statements in the 2016 annual information disclosure report.
(5) The loss of underwriting business has become a common phenomenon
In the case that the insurance business income mainly depends on motor vehicle insurance and the cost is high, the underwriting business of small and medium-sized property insurance companies generally suffers losses. Combined with the data disclosed in the top five insurance products under the “Insurance Product Operation Information†in the 2016 Annual Information Disclosure Report, it can be found that there are four main characteristics:
First, whether it is a large, medium or small property insurance company, motor vehicle insurance is basically the product that contributes the most to the original premium income, and it is also an oligopolistic market competition. For example, China Life Insurance's motor vehicle insurance original premium income exceeds the sum of small property insurance companies, while the industry's number one PICC insurance motor vehicle insurance is seven times the sum of small property insurance companies.
Second, large-scale property insurance companies except for Tianan Property Insurance and China United, the underwriting business is profitable, and motor vehicle insurance is the most important profit contributor. Both Tianan P&C Insurance and China United’s underwriting business suffered losses, and motor vehicle insurance was the biggest source of losses. This also shows the dependence of the property and casualty industry on the profitability of motor vehicle insurance.
Third, the medium-sized property insurance company's underwriting business achieves profitability. Motor vehicle insurance is the biggest profit contributor without exception; except for Huaan P&C Insurance and Yingda P&C Insurance, the motor vehicle insurance in the underwriting profit of the loss-making property insurance company is the largest. Source of loss.
Fourth, small property insurance companies have incurred losses in addition to Anxin Property Insurance and Dinghe P&C Insurance to achieve underwriting profits. Among the 19 property insurance companies (90.48%) with losses in the underwriting business, 18 motor vehicle insurances became the largest source of underwriting business losses. This exposes small property and casualty companies at a disadvantage when competing with large and even medium-sized property insurance companies for motor vehicle insurance.
In addition, foreign-invested property insurance companies that carry out motor vehicle insurance in the top five insurance products have suffered losses in the underwriting business, and motor vehicle insurance is the largest source of losses.
(6) The asset allocation structure is not reasonable
Asset and liability management is an important means of managing liquidity risk and market risk (such as interest rate risk and exchange rate risk). Compared with small and medium-sized life insurance companies, small and medium-sized property insurance companies need to pay more attention to liquidity risk management. This is directly related to the unique product characteristics of the property and casualty company.
Compared with large property insurance companies, the asset allocation structure of small and medium-sized property insurance companies, especially small property and casualty insurance companies, has three main characteristics (see Table 6):
First, the proportion of trading financial instruments that capture market volatility gains is too high, and presents a large and small order > medium >
Table 6 Asset structure of large, medium and small property insurance companies
Note:
1. Transactional assets are financial assets that are measured at fair value through profit or loss and financial assets that are measured at fair value through profit or loss.
2. Long-term equity refers to equity investments that are not included in the scope of the consolidated financial statements.
3. This table does not exclude two asset-oriented property and casualty insurance companies such as Anbang Property Insurance and Tianan Property Insurance.
4. The calculation base of the scale of this table is the total assets.
5. Almost all property and casualty companies did not disclose the detailed structure (such as categories) of investment assets in the annual information disclosure report.
Source of data: Balance sheet and its notes in the 2016 annual information disclosure report.
Second, the proportion of bond allocation is relatively insufficient. Compared with the life insurance company's longer debt duration, the property insurance company's liability duration is relatively short, and its operation is characterized by a relatively low proportion of bond-type financial assets allocation structure. Compared with large property and casualty insurance companies, small and medium-sized property and casualty insurance companies have to wait for market capacity in terms of customers, channels and products, and investment, and equity asset allocation (including equity investment) is relatively low. Compared with large and small property insurance companies, the long-term asset allocation of medium-sized property insurance companies seems to be more radical, such as the ratio of available-for-sale financial assets and non-standard fixed-income products (loans and receivables). For example, the “loans and receivables†in the investment assets of medium-sized property insurance companies accounted for 18.96%.
Third, the diversification of asset allocation needs to be improved, but slightly better than foreign property insurance companies. In addition to traditional bonds and equity financial assets, compared with small and medium-sized property insurance companies, large-scale property and casualty companies have more diversified investment asset allocations, such as derivative financial instruments and policy pledge loans; foreign property and casualty insurance companies are more equipped with time deposits, etc. Fixed income products.
The asset allocation structure directly determines the composition of investment income. For example, small and medium-sized property and casualty companies deposits (such as time deposits and deposits of capital guarantees) interest income is higher than that of large property and casualty insurance companies, especially small property insurance companies; large property and casualty companies are in dividend income (fund dividends and equity) Dividends, etc.) are relatively higher, and investment income is relatively more diversified, such as the development of policy pledge loans and derivative transactions.
(7) The profit cycle is generally long
Compared with large property and casualty insurance companies, medium-sized property and casualty insurance companies generally have accumulated profits, but small property and casualty insurance companies generally have accumulated losses (loss of 95.45%) in addition to Dinghe P&C. From the perspective of the medium-sized property insurance profit cycle, the period is 10-15 years; the longest loss period for small property insurance companies is 12 years. This means that the resource advantage of the initial sponsoring shareholder is critical to the survival of the new small property insurance company.
In summary, small and medium-sized property insurance companies are facing a relatively unfavorable market competition pattern at this stage. This unfavorable market competition situation is not only reflected in the gap in the competitiveness of its own market, but also in the inevitable pressure brought by the oligopolistic market competition, and ultimately reflected in the poor financial indicators, the solvency adequacy rate and the larger Capital replenishment pressure.
June 24, 2017
The top five commercial insurance products of China United Property Insurance Co., Ltd. all suffered losses in the underwriting business.
The motor vehicle insurance underwriting business of Yingda P&C is also a loss; the biggest loss source of Huaan P&C underwriting business is short-term health insurance business.
Yanzhao Property Insurance did not disclose the underwriting profit realization data of the top five commercial insurance products.
The large property and casualty insurance company Zhongtian An Property Insurance and China United is a cumulative loss, but the former is asset-driven and the latter is historically burdensome. Nine medium-sized property and casualty insurance companies have accumulated profits. Among them, Yingda P&C achieved profitability within 4 years by virtue of shareholder advantage.
The China Insurance Association website only publishes the annual information disclosure report for 2010. This article cannot be traced back to earlier reports. For example, large property and casualty insurance companies are basically unable to obtain annual information disclosure reports before 2010.
When calculating the period of time, from the opening year to 2016 (inclusive).
(The author of this article: Chief Economist, Beijing Financial Street Investment (Group) Co., Ltd.)
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