Risk Caused by Investment Channel and Its Management Measures in Insurance Companies Empirical Analysis of Chinese Insurance Industry by Wavelet Transform

This paper focuses on the relationship between life insurance and the investment environment combine with econometrics qualitative analysis and quantitative analysis methods, and analyzes that systemic risks of life insurance industry may be caused by interest rate and stock price, so that we should always regard system of prudent macro management as the regulatory standards to take precautions against systemic risks, and suggests that foreign insurance companies should take reasonable strategies to diversify their risks. Firstly, this paper theoretically analyzes why the relationship between life insurance and the investment environment exists and considers the situation of China combined with the research in the world, and draws the conclusion that the life insurance will be affected by interest rate and stock market more obviously in China. Secondly, to find out the relationship accurately, this article quantifies their lead-lag relationship by using Wavelet Transform and Granger Test of Causality. Finally, a further research shows that investment-linked insurance and universal insurance have a higher correlation with investment environment. The main businesses of foreign insurance companies are these kinds of products, so that they are facing more risks. This article proposes that they should take reasonable strategies and keep a stable management, and points out that it is an advisable choice for Chinese insurance industry to guide consumers to diversify their risks and allocate their asset.

Keywords:

life insurance , investment , systemic risk , risk management , foreign insurance company , Wavelet Transform