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Strategic Risk Management in the Chinese Property and Casualty Insurance Industry

In: Asia-Pacific Contemporary Finance and Development

Author

Listed:
  • Yayun Yan
  • Sampan Nettayanun

Abstract

Our study explores friction costs in terms of competition and market structure, considering factors such as market share, industry leverage levels, industry hedging levels, number of peers, and the geographic concentration that influences reinsurance purchase in the Property and Casualty insurance industry in China. Financial factors that influence the hedging level are also included. The data are hand collected from 2008 to 2015 from the Chinese Insurance Yearbook. Using panel data analysis techniques, the results are interesting. The capital structure shows a significant negative relationship with the hedging level. Group has a negative relationship with reinsurance purchases. Assets exhibit a negative relationship with hedging levels. The hedging level has a negative relation with the individual hedging level. Insurers have less incentive to hedge because it provides less resource than leverage. The study also robustly investigates the strategic risk management separately by the financial crises.

Suggested Citation

  • Yayun Yan & Sampan Nettayanun, 2019. "Strategic Risk Management in the Chinese Property and Casualty Insurance Industry," International Symposia in Economic Theory and Econometrics, in: Asia-Pacific Contemporary Finance and Development, volume 26, pages 89-115, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620190000026006
    DOI: 10.1108/S1571-038620190000026006
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    More about this item

    Keywords

    Risk management; strategic risk management; property and casualty insurance industry; competition; panel data; Chinese Insurance Industry; G22; G32;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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