China’s Insurance Companies’ Efficiency： An Empirical Study Jiayan ZHU Thesis submitted as partial requirement for the conferral of the degree of Doctor of Management Supervisor: Prof. Álvaro Rosa, Associate Professor, ISCTE University Institute of Lisbon Co-supervisor: Prof. Liping, Full Professor, University of Electronic Science and Technology of China, School of Management and Economics Sep. 2019 China’s Insurance Companies’ Efficiency：An Empirical Study Jiayan ZHU - Spine Spine – China’s Insurance Companies’ Efficiency： An Empirical Study Jiayan ZHU Thesis submitted as partial requirement for the conferral of the degree of Doctor of Management Supervisor: Prof. Álvaro Rosa, Associate Professor, ISCTE University Institute of Lisbon Co-supervisor: Prof. Liping, Full Professor, University of Electronic Science and Technology of China, School of Management and Economics Sep. 2019 Statement of honor Submission of master's dissertation or project work or doctoral thesis I the undersigned state on my honor that: - The work submitted herewith is original and of my exclusive authorship and that I have indicated all the sources used. - I give my permission for my work to be put through Safe Assign plagiarism detection tool. - I am familiar with the ISCTE-IUL Student Disciplinary Regulations and the ISCTE-IUL Code of Academic Conduct. - I am aware that plagiarism, self-plagiarism or copying constitutes an academic violation. Full name: Jiayan ZHU Course:Doctor of management Student number: Email address: [email protected] Telephone number:+86-18611661950 ISCTE-IUL, 15/5/2019 Signed Abstract Great achievements have been seen in China’s insurance industry in the past 20 years, however, inefficiency problems were prevailing as many insurance company only pursuing the expansion of the quantity, but not the increase of their key competitiveness. How to improve the core competitiveness of China's insurance industry, especially the efficiency of Chinese- funded insurance companies, has always been an important issue that the Chinese government, regulators and insurance institutions have been paying attention to and exploring for a long time. This thesis uses the most advanced efficiency evaluation model——three-stage DEA method and a samples of 43 property insurance companies and 53 life insurance companies to calculate the technical efficiency, pure technical efficiency and scale efficiency from 2008 to 2011. The research results show that China’s insurance industry has high technical efficiency and pure technical efficiency, while its scale efficiency is low and its scale is still in an expanding stage from 2008 to 2011. In order to compete with foreign insurance companies, Chinese insurance companies must upgrade their key competitiveness and pure technical efficiency as soon as possible. Through more rational allocation of resources and more refined management, China's insurance industry can achieve its development goals. According to Empirical research, the main reason for the weak core competitiveness of Chinese small and medium-sized insurance companies is the imbalance of inputs and outputs. Therefore, through rational allocation of resources, optimization of business strategies, and control of costs, the efficiency of companies can be improved. By studying the factors affecting the efficiency of Chinese insurance companies, the conclusion shows that the expansion of asset size will significantly increase the technical efficiency and scale efficiency of life insurance companies and property insurance companies. Moreover, all efficiency of foreign property insurance companies outperform Chinese-funded ones, while technical efficiency of Chinese-funded life insurance companies outperform foreign ones. Key words: Three-stage DEA, insurance industry, efficiency, China JEL: C14；G22 Resumo Tem-se assistido nos últimos 20 anos um desenvolvimento extraordinário da indústria de seguros na China, contudo, o problema da ineficiência continua a ser um problema grave porquanto que a indústria de seguros na China caracteriza-se no essencial pela expansão em dimensão e não nos fatores de competitividade. A necessidade de melhoria da capacidade competitiva da indústria chinesa de seguros e, em especial, a eficiência de seguradoras de capital chinês tem sido uma preocupação importante para o governo chinês, para os reguladores e para as próprias instituições seguradoras. Este trabalho, utilizando o método de eficiência DEA de três estádios e uma amostra composta por 43 seguradoras de seguros imobiliários e 53 outras do ramo vida, computou a eficiência técnica, eficiência técnica pura e a escala de eficiência no período de 2008 e 2011. Os resultados da investigação mostram que a indústria seguradora da China tem uma elevada eficiência técnica e técnica pura, enquanto que a escala de eficiência é baixa e demonstramos que se encontrava numa fase de desenvolvimento no período de 2008 e 2011. De acordo com a nossa investigação empírica, a razão principal da fraca competitividade das seguradoras chinesas de pequena e média dimensão é o desequilíbrio entre «inputs» e «outputs». Com uma afetação racional de recursos, otimização de estratégias de mercados e controlo de custos, a eficiência das seguradoras poderia ser melhorada. Na análise de fatores que afetam a eficiência das empresas chinesas de seguros, o nosso estudo mostra que o reforço de ativos contribuirá para a melhoria da eficiência técnica e da escala de eficiência de seguradoras tanto do ramo vida como do ramo imobiliário. Concluímos ainda que as seguradoras estrangeiras têm melhor eficiência do que as congéneres chinesas, mas avaliando pela ótica de eficiência técnica, as seguradoras chinesas têm melhor desempenho que as seguradoras estrangeiras. Palavras-chave: DEA de três estádios, seguros, eficiência, China. JEL: C14; G22 摘 要 近二十年来，中国保险业虽然取得了举世瞩目的发展成果，但大多数保险公司只关 注保费增量而不关注核心竞争能力的提升，普遍存在效率低下的问题。如何提高中国保 险业的核心竞争能力，特别是中资保险公司的效率，一直是中国政府、监管机构、保险 机构长期关注和探索的重要问题。 本文运用目前最先进的效率评价模型——三阶段 DEA 方法，采用 2008 年～2011 年 43 家财险公司和 53 家寿险公司在内的 96 个样本企业，测算中国保险公司的技术效率、 纯技术效率和规模效率。研究结果表明，2008 至 2011 年间中国保险业的技术效率、纯 技术效率均已经达较高水平，但是规模效率仍然处于较低水平，但整个保险业的规模仍 处于不断扩大的阶段。中资保险公司要与国外保险公司竞争，就必须尽快提升核心竞争 力的技术水平、提高纯技术效率。通过更合理资源配置和更精细化的经营管理，实现中 国保险业的发展目标。 通过实证分析，本文认为中国中小保险企业核心竞争力较弱的主要原因是投入和产 出不均衡。国内中小保险企业应通过资源的合理分配、优化经营策略，控制费用和成本, 以提升保险公司效率。 通过对中国保险公司效率的影响因素研究，本文结论资产规模的提升会显著增加寿 险和财险公司的技术效率和规模效率。外资财险的所有效率比中资均有优势，而中资寿 险在技术效率有优势。 关键词：三阶段 DEA、保险业、效率、影响因素 JEL: C14 数理数量：半参数和非参数方法；G22 保险；保险公司. Acknowledgements The five years of doctoral study, which was the most precious period of my life. I am really lucky meet many good teachers, relatives and classmates’great encouragement and support. First of all, I would like to express my appreciation and deep respect to my Chinese supervisor, Professor Li Ping, he always assiduously, diligently and selflessly gave me a lot of help and guidance. His scientific and meticulous attitude, profound knowledge, exemplary demeanor, selfless work enthusiasm, a high degree of professionalism, elevated professional dedication and scientific working method influence me in a profound way and will benefit me in my whole life. Secondly, I would like to show my sincere thanks to my Portuguese supervisor, Professor Álvaro Rosa who gave me a lot of help and guidance in terms of topic selection, research method, thesis writing and contributed his arduous efforts and encourage me to finish this thesis. I would like to express my sincere gratitude to Professor Álvaro. Thirdly, as one candidate of joint doctoral program between ISCTE and UESTC, I would like to express my warm thanks to our program director, Professor Virginia Trigo, Professor Xiao Wen, Professor Zeng yong, Sun ping, Yan pengyu, Gao xiaoli and Chen yang for your hard work. At the same time, many thanks to my family, classmates and friends. At the last, thanks also go to Dongxin and Shi Hao, my junior fellow apprentice, which provides many conveniences for me in pursuing the doctorate. Therefore, I want to express my deep apologies and gratitude to him. "There is no shortcut to the mountain of books, and there is no end for the sea of knowledge by Painful voyage." (This Chinese verse means: only the diligent will be rewarded by God in their pursuit for knowledge.) This thesis explores the significant further analysis of Chinese insurance industry efficiency theoretical principle and evaluation method. This thesis not only means the doctoral education achievements, but also for my new field of academic research for over 10 years experience of insurance industry and capital management field. From now on, I will reward my teachers, friends and relatives by hard work and diligent learning. 鸣 谢 攻读博士的五年，是我人生最宝贵的一段成长历程。我感到非常幸运，能得到师长、 亲人和同学给予我巨大的鼓励和支持。 首先，特别感谢我的中方导师——李平教授。他科学严谨的研究态度、渊博的知识、 为人师表以身作则的风范、忘我的工作热情以及高度的敬业精神，对我的工作和学习都 影响深远，使我受益匪浅。在此，我谨向李平教授表达深切的谢意。 其次，学生在此衷心地感谢葡萄牙导师——Álvaro Rosa 教授。无论是在中国还是在 葡萄牙与他的多次交流，Álvaro Rosa 教授从选题、确定研究方法等一开始就对学生进行 细致、持续性地指导直至论文完成。 第三，作为 ISCTE 和电子科大管理学博士项目的博士生，我衷心地感谢我们的项目 主任——Virginia Trigo 教授和所有在葡萄牙给我们授课的老师，并感谢电子科技大 学的曾勇教授、肖文教授、储小平教授、孙平教授、晏鹏宇等教授和高晓莉、陈阳等老 师的辛勤工作。 同时，感谢我的家人、同学和朋友的支持和理解。 最后，还要感谢董鑫和史浩两位师弟，为我提供了学术便利。 “书山有路勤为径，学海无涯苦作舟。”本论文在中国保险业效率分析和评价等方 面做出了较有意义的探索。本论文不仅意味着博士求学的阶段性成果，同时也是我长达 10 多年在保险行业和资管行业学术研究的阶段性总结。在日后的工作、生活中，学生唯 有勤奋努力、刻苦专研，才能回报支持我的师长、亲人和朋友。 Contents Chapter 1: Introduction ...........................................................................................................1 1.1 Research Background ................................................................................................ 1 1.2 Research